GBP/USD Aims Above $1.7200; GBP/CHF, EUR/GBP Breakouts Confirmed?
- GBPUSD on way to 100% fib extension target of 1.7228.
- GBPCHF and EURGBP begin flag breakouts.
- See the DailyFX Economic Calendar for Wednesday, July 2, 2014.
The UK economy heated up at the end of the second quarter, setting the stage for a promising second half of 2014 as well as fervent speculation about the first Bank of England interest rate hike. The June UK PMI Construction print topped 60 for the eighth consecutive month and is now at its highest level since February, helping propel the British Pound to fresh 2014 highs versus the US Dollar.
It's not just Cable that has been excelling in recent days. The highly-correlated duo of EURGBP and GBPCHF have also started to continue on their ways in favor of further Sterling strength, each having maintained their trends dating back to late-March. With the July European Central Bank meeting tomorrow, these pairs should see more than a little volatility over the coming 24-hours.
Overall, the outlook for the British Pound remains promising. With the economy starting to accelerate once more (the June PMI readings have been well-above expectations), hawkish Bank of England Governor Mark Carney may be closer to having the evidence in hand to convince other MPC members to raise interest rates.
Always worth noting, July has proven to be a strong month for the British Pound in recent years, per QE era seasonality (2009 to present).
--- Written by Christopher Vecchio, Currency Analyst
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