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Sterling Top Developing Alongside Euro after BoE: GBP/JPY, GBP/USD

Sterling Top Developing Alongside Euro after BoE: GBP/JPY, GBP/USD

2014-05-14 11:30:00
Christopher Vecchio, CFA, Sr. Currency Strategist
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Talking Points:

- GBPUSD working on back-to-back weekly inverted hammers.

- GBPJPY loses uptrend dating back to November 2012.

- GBPAUD head & shoulders topping continues below 1.7750.

To keep up with developments central banks and their policy changes, be sure to sign up for my distribution list.

The Bank of England has lowered its inflation forecasts marginally for the next three years (2014-2016), and as a result the market has interpreted the shift in tone as a signal that the first rate hike away from the all-time low of 0.50% is still well-off into the future. Citing excess slack in the economy (with about 1-1.5% still remaining), there is still room for the economy to grow before a tightening of monetary policy is required.

The backdrop of weaker expected inflation allows the BoE to keep interest rates lower for longer, and as a result the British Pound is under pressure across the board, posting all-too-similar patterns versus the Australian Dollar, the Japanese Yen, and the US Dollar - it's very possible that the entire European currency complex is seeing a sea change at the moment.

Watch the video for a discussion on GBPAUD, GBPJPY, and GPBUSD, and click the link below for a look at various EUR-crosses.

Read more: EUR/JPY, EUR/USD Bearish Key Reversals Begins Continuation Lower

--- 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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