GBP/USD Rallied As BoE Voted 7-2 And UK Jobs, Wages Beat Forecast
- BOE Minutes Reveal an Interest Rate Vote of 7-2 By the MPC Members.
- GBP/USD Surge After The BOE Minutes and Job Figures To Trade As High As 1.6336.
- Looking Ahead September’s FOMC Rate Decision Will Take Center Stage.
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The BoE Minutes released in September revealed that BoE Policy makers voted 7-2 for the hold interest rate decision, unchanged compared to the prior month’s minutes. The BoE minority called for a 25 basis-points rate hike as they stated wage growth may pick-up quite sharply and early rate increase will allow for a gradual path for tightening. However, the majority saw increased geopolitical risks as a concern and saw increased market volatility due to Scottish Independence Referendum. Moreover, they have highlighted the recent fall in the British Pound to have put a downward pressure on inflation on the backdrop of UK CPI slowing to a five-year low.
Ahead of the BoE Minutes, the British Pound hit a 1-1/2 week high against the US Dollar to trade at 1.6323, firmly above the critical 1.6300 level. Subsequent to the release of the figures, GBP/USD extended gains as UK Jobless Claims dropped more than forecast to a six-year low. GBP/USD rose to 1.6336, session high, as UK Jobs and Wages exceeded market expectations. To check the figures for theUK Jobs Figures head to DailyFX Economic Calendar. However, DailyFX Currency Strategist Ilya Spivak has mentioned of a limited follow-through as traders may wait for the outcome of Thursday’s Scottish Independence Referendum. This hesitation can be seen in the UK 10-year Gilts as it stayed little changed after the releases aforementioned.
Preceding ahead, September’s high-profile Federal Open Market Committee (FOMC)Rate Decision and subsequent Fed Chairwomen Janet Yellen Press Conference will take center stage at 18:00 GMT and 18:30 GMT respectively. DailyFX Chief Currency Strategist John Kicklighter heightens the importance of this FOMC Meeting compared to the previous as this is the quarterly meetings. This means in addition to a most probable ‘Taper’ (reduce its monthly QE3 purchases) for the second-to-last time, the policy members will also release its updated forecasts on employment, inflation and interest rates.
For those Forex traders that respects technical analysis, Ilya Spivak mentions near-term support to rest at 1.6217 (14.6% Fib Ret.) and resistance at 1.6320 (23.6% Fib Ret.). He remains flat for now as Scottish Independence Referendum looms ahead and a “Yes” outcome will bode-severely-ill on the currency pair. With that key event risk in mind, he remains flat for the time being. Meanwhile according to DailyFX Speculative Sentiment Index, the ratio of long to short positions in the GBP/USD stands at 1.21 as 55 percent of FXCM retail traders are long.
GBP/USD 5 Minute Chart
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Edward Hyon, DailyFX Research Team
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