Today, on October, the British Pound keeps on gaining value against it American counterpart. By the end of the Asian trading session, the currency pair had already gained 0,2%. The rally is taking place amid a stronger UK economy coupled with the Fed’s concerns about a stronger dollar and some other fundamentals.
Today, the market participants will be waiting for the results of the Bank of England’s meeting. At this point, experts do not expect any major changes in the central bank’s policies. The interest rate is likely to be left unchanged at the record low of 0,5%.
After the latest Fed meeting minutes were released, the British Pound started gaining value against the US Dollar. During the Fed meeting, the participants expressed their concerns over the fact that a much stronger dollar may affect American exporters, therefore undermining the current economic growth in the USA. The minutes also hint at the possibility of stronger deflation pressures because of the fact that the current strengthening of the US Dollar is contributing to lower import prices. With that said, the consumer inflation rate is going to be below the 2% target. These concerns made the US Dollar waken a little bit against other majors.
As for the UK, the local economy may well show the strongest economic growth among developed economies this year. According to the IMF forecast, the British economy is going to expand by 3,2% and 2,7% in 2014 and 2015 respectively. This took place amid lower predictions for the global economic growth.
As of today’s meeting, the BOE may well leave its monetary policy unchanged, thereby leaving the key interest rate at 0,5% this time. The first interest rate hike in the UK is expected to take place in February 2015. With that said, the BOE may be the first major central bank to start raising interest rates. If this is the case, the interest rate hike in the UK happens before it is done in the USA, which will definitely push the British Pound to new highs against the US Dollar. Still, the economic slowdown in the Eurozone is considered one of the major risks for the UK economic growth.
GBPUSD: Mid-Term Prospects
As usual, Masterforex-V Academy and its trading experts help Market Leader and its audience define the current situation and the near-term prospects in currency markets like GBPUSD.
The experts report that the mid-term bias in the market of GBPUSD is still bearish since the H1 chart of the currency pair indicates that the bullish reaction of the British Pound started only on October 3rd after testing the level of support at 1.5951. After consolidating within the scope of the 1,6025-1,6128 range for a while, the price resumed the recovery.
Still, this move is of reaction nature. The price is currently trying to get at the other side of MAs 21 and 55 (they indicate the direction of the short-term and mid-term trends). Still, MA 255 is going down, thereby indicating the bearish long-term bias.
With that said, a break and consolidation above all of these Mas as well as above 1,6128 will give way to 1,6250 and 1,6285. The price may also consolidate close to resistance levels.
Alternatively, the price reverses and resumes the downtrend by breaking below Mas 21 and 55 as well as 1,6128 to head for 1,6025.
Meanwhile, the Binary Options Department of Masterforex-V Academy assumes that any trader may benefit from trading GBPUSD through purchasing call options anytime the price consolidates to see further local highs. The estimated average lifetime of the binary options is 2 hours. Trading should be done at the start of the European trading session. The one position should be followed so as to be closed if the price moves up and then reverses to go back within an hour.
