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British Pound Remains on Edge as Markets Look to Bank of England

British Pound Remains on Edge as Markets Look to Bank of England

2013-11-13 10:20:00
Christopher Vecchio, CFA, Senior Strategist
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Talking Points:

- UK labor markets improving faster than anticipated.

- Projection sees UK Unemployment Rate at 7.0% in 4Q’14.

- Tone of Quarterly Inflation Report will guide GBP-based pairs.

To keep up with the European data and news as the week goes forward, be sure to sign up for my distribution list.

Intraday Price Perspective

British_Pound_Remains_on_Edge_as_Markets_Look_to_Bank_of_England_body_Picture_1.png, British Pound Remains on Edge as Markets Look to Bank of England

A scan of this morning’s best and worst performers via the Strong/Weak app shows that the Australian Dollar is the big underperformer on the day, while the British Pound has perked up to take top spot from the Euro over the past rolling 24-hour period. Accordingly, with the British Pound surging on the lower timeframes as well (m15, H1, H4), there may be a clearer opportunity emerging to play for a continuation of Sterling strength.

TECHNICAL ANALYSIS – CHART OF THE DAY

GBPAUD Daily Chart: July 2013 to Present

British_Pound_Remains_on_Edge_as_Markets_Look_to_Bank_of_England_body_x0000_i1028.png, British Pound Remains on Edge as Markets Look to Bank of England

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The GBPAUD has traded in a sideways channel for the past three months, but recent data has helped shift momentum to the upside. The short-term moderate ascending channel since the October 22 low may be giving way to a more concerted uptrend, since November 5. Accordingly, a hawksih BoE today could help set the GBPAUD into breakout territory above 1.7175, on course for 1.7325 over the coming days.

Alternatively, we like the GBPUSD lower if the BoE strikes a dovish tone.

Here’s a look at the data out of Europe this morning that’s influencing price action:

EURO-ZONE ECONOMIC CALENDAR

British_Pound_Remains_on_Edge_as_Markets_Look_to_Bank_of_England_body_x0000_i1029.png, British Pound Remains on Edge as Markets Look to Bank of England

UK ECONOMIC CALENDAR

British_Pound_Remains_on_Edge_as_Markets_Look_to_Bank_of_England_body_x0000_i1030.png, British Pound Remains on Edge as Markets Look to Bank of England

SWISS ECONOMIC CALENDAR

There are no data on the Swiss Franc economic calendar on Wednesday, November 13, 2013.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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

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