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COZfx: GBP/USD remains near 2-week highs on BoE report

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COZfx: GBP/USD remains near 2-week highs on BoE report

Postby dwang » Thu Feb 13, 2014 2:08 am

COZforex: The pound remained near 2 week highs against the US dollar on Wednesday, as demand for sterling strengthened broadly after the Bank of England upgraded its forward guidance on rates and revised up its forecast for economic growth this year.

GBP/USD hit 1.6571 amid US morning trade, the pair's highest since January 29; the pair subsequently consolidated at 1.6564, climbing 0.69%. COZFX strategist Nigel Boynton said, GBP/USD is predicted to find support at 1.6397, and a drop through could take it to the next support line of 1.6346. Meanwhile, the pair is predicted to find its first resistance at 1.6495, and a rise through could take it to the next resistance line of 1.6542.

Speaking after the bank published its latest quarterly inflation report, BoE Governor Mark Carney said the UK unemployment rate has fallen much faster than the bank anticipated, and will hit the initial 7% threshold “in the spring”.

In the 6 months since forward guidance was implemented the UK unemployment rate has fallen to 7.1% from 7.8%.

The bank outlined new forward guidance, saying that it will not raise rates until the spare capacity in the UK economy has been fully absorbed, which it does not see happening until 2015. The bank said it would consider a broader range of indicators, including the unemployment rate, wages and productivity and business surveys when deciding to raise rates, and added that when rates rise they will do so only gradually.

Traders keenly await the BoE quarterly inflation report and the BoE Governor, Mark Carney’s speech, due later today, to gauge whether there would be any adjustments to the BoE’s forward guidance policy.

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