News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Bearish
Wall Street
Mixed
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • Heads Up:🇺🇸 Presidential Debate due at 01:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-09-30
  • Heads Up:🇨🇳 Non Manufacturing PMI (SEP) due at 01:00 GMT (15min) Previous: 55.2 https://www.dailyfx.com/economic-calendar#2020-09-30
  • Heads Up:🇨🇳 NBS Manufacturing PMI (SEP) due at 01:00 GMT (15min) Expected: 51.2 Previous: 51 https://www.dailyfx.com/economic-calendar#2020-09-30
  • What are some key points post the US Presidential debate? Get your key highlights here with @ZabelinDimitri at 10:30PM EST here: https://t.co/XV0y5M8KLT https://t.co/PUTq6kOjxt
  • Although recent polls suggested that Joe Biden is leading, the odds that Donald Trump may again defy the preconceived forecasts still exist. Remember he is Trump. And thus a face-to-face debate is worth traders’ precious time. Live TV show begins in 50 mins.
  • Dow displayed a bearish trading pattern overnight: 7 out of 9 sectors in the red, with 86.7% of the index constituents ending lower. Energy, materials and industrials were among the worst performers, while healthcare and consumer discretionary struggled to hold small gains. https://t.co/hI957NZRLr
  • 🇯🇵 Industrial Production YoY Prel (AUG) Actual: -13.3% Previous: -15.5% https://www.dailyfx.com/economic-calendar#2020-09-29
  • 🇳🇿 ANZ Business Confidence (SEP) Actual: -28.5 Previous: -41.8 https://www.dailyfx.com/economic-calendar#2020-09-30
  • 🇯🇵 Retail Sales YoY (AUG) Actual: -1.9% Expected: -3.5% Previous: -2.8% https://www.dailyfx.com/economic-calendar#2020-09-29
  • Heads Up:🇳🇿 ANZ Business Confidence (SEP) due at 00:00 GMT (15min) Previous: -41.8 https://www.dailyfx.com/economic-calendar#2020-09-30
Pound Sells Off on Concerned BoE Forward Guidance

Pound Sells Off on Concerned BoE Forward Guidance

2013-07-04 11:46:00
Benjamin Spier, Technical Strategist
Share:

THE TAKEAWAY: BoE releases forward guidance concerned with interest rates and growth -> Asset Purchase Target and Interest Rate remain unchanged -> Pound sells off on guidance

The Bank of England released slightly dovish forward guidance with its July interest rate and asset purchase decision, thereby breaking away from the usual habit of not providing reasoning for the decision until the release of the meeting’s minutes later in the month. The BoE comments noted that higher market interest rates are weighing on its economic outlook, which led to a selloff in the Pound against the US Dollar.

The BoE decided to keep the interest rate and asset purchase target at 0.5% and 375 billion Pounds respectively, as was expected by a majority of Bloomberg surveyed analysts. However, there was speculation that the new governor, Marc Carney, would look to add a forward guidance statement, as a measure to explicitly spell out flexible inflation targets and desired economic performance. Therefore, the appearence of forward guidance that noted worry over interest rates was received as dovish in Forex markets.

Regarding economic performance, the BoE said that although the economic recovery is on its way, it is still weak based on historical standards and slack is expected for some time. These comments may have been seen by some as unexpected following the recent multi-year highs seen in UK manufacturing and services PMI’s.

The central bank also said that inflation is set to rise further above May’s 2.7% rate in the near term, but will eventually fall back to the BoE’s target inflation rate. The minutes from the meeting will be published on July 17.

The presence of the forward guidance as well as the new concerns over market interest rates drove the Pound over 150 points lower against the US Dollar. GBP/USD is trading below 1.5100 at the time of this writing, and may next see support by the key 1.5000 level. Cable may find resistance by a rising trend line from March, currently at 1.5128.

(How does a Currency War affect your FX trading? Take our free course to find out!)

GBPUSD Daily: July 4, 2013

Pound_Sells_Off_on_Concerned_BoE_Forward_Guidance__body_gbpusd.png, Pound Sells Off on Concerned BoE Forward Guidance

Chart created by Benjamin Spier using Marketscope 2.0

-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to instructor@dailyfx.com .

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES