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GBP to Target 1.6850-60 on Hawkish Bank of England (BoE) Testimony

GBP to Target 1.6850-60 on Hawkish Bank of England (BoE) Testimony

2014-03-07 01:47:00
David Song, Currency Strategist
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Forex_GBP_to_Target_1.6850-60_on_Hawkish_BoE_Testimony_body_GBPUSD_for_GBP_ToF.png, GBP to Target 1.6850-60 on Hawkish Bank of England (BoE) Testimony

Fundamental Forecast for the British Pound: Bullish

The GBPUSD pulled back from a fresh monthly high of 1.6784 following the better-than-expected U.S. Non-Farm Payrolls report, but the British Pound may continue to coil up for a move higher as the Bank of England (BoE) moves away from its easing cycle.

Indeed, the Monetary Policy Committee (MPC) refrained from releasing a policy statement after retaining its current policy in March, but it seems as though the central bank will do little to halt the appreciation in the sterling as it helps to achieve the 2% target for inflation.

Beyond the U.K. data prints on tap for the week ahead, Governor Mark Carney, Paul Fisher, David Miles and Martin Weale are scheduled to testify in front of Parliament’s Treasury Committee on March 11, and the fresh batch of central bank rhetoric may spur a bullish reaction in the GBPUSD should we see a growing number of BoE officials show a greater willingness to normalize monetary policy sooner rather than later.

With that said, we will retain a bullish outlook for the GBPUSD as it appears to be carving a higher low above the 1.6600 handle, and will continue to look for a move into the 1.6850-60 region, the 78.6% Fibonacci expansion from the October advance, as the Relative Strength Index (RSI) preserves the bullish trend carried over from the previous year. - DS

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