18 Sep 2013
GBP/USD lined up for 1.6000 ahead of FOMC?
FXstreet.com (London) - GBP/USD could be a volatile play over the FOMC coming up, and is certainly in range of 1.6000 where the pair was last seen at the start of the year.
GBP/USD depends very much so on the decision and accompany words form the FOMC, but meanwhile we got an optimistic picture earlier from the BoE minutes, propping up Sterling. Research teams at TD Securities said “The MPC acknowledged the better UK activity lately and upgraded their growth outlook for the remainder of the year, but perhaps more importantly they did not make any attempt to push back on the recent rise in Gilt yields. 10-yr Gilts are now testing 3.0% again as a result. UK-US short term yield spreads are not as tightly correlated with the spot rate in GBP/USD, but the sharp widening of in the spread overnight certainly helps support a higher GBP/USD. All eyes now shift to the Fed for the next sharp move”. Greg Anderson, strategist at BMO explained “The market has been looking forward to this FOMC decision since the Minutes of the May 1st meeting contained concrete hints that the FOMC was looking at reducing its monthly QE quantity from the present $85bn per month ($40bn mortgage-backed agency securities, $45bn US Treasuries). Every data point and every speech by a FOMC participant has been interpreted with regards to how it might change the odds of the Fed tapering at this meeting…the mix of data has come in inconclusive, so that the decision on whether or not to taper in September will be a difficult judgement call for every FOMC member”.
GBP/USD levels
Indicators suggest momentum has slowed down. The 20 DMA is 1.5657, the 50 DMA is 1.5473 and the 200 DMA is 1.5486. Supports are ascending 1.5936 and 1.5963 where the pair trades at currently while resistances are 1.5992, 1.6010, 1.6040 and 1.6080.
GBP/USD depends very much so on the decision and accompany words form the FOMC, but meanwhile we got an optimistic picture earlier from the BoE minutes, propping up Sterling. Research teams at TD Securities said “The MPC acknowledged the better UK activity lately and upgraded their growth outlook for the remainder of the year, but perhaps more importantly they did not make any attempt to push back on the recent rise in Gilt yields. 10-yr Gilts are now testing 3.0% again as a result. UK-US short term yield spreads are not as tightly correlated with the spot rate in GBP/USD, but the sharp widening of in the spread overnight certainly helps support a higher GBP/USD. All eyes now shift to the Fed for the next sharp move”. Greg Anderson, strategist at BMO explained “The market has been looking forward to this FOMC decision since the Minutes of the May 1st meeting contained concrete hints that the FOMC was looking at reducing its monthly QE quantity from the present $85bn per month ($40bn mortgage-backed agency securities, $45bn US Treasuries). Every data point and every speech by a FOMC participant has been interpreted with regards to how it might change the odds of the Fed tapering at this meeting…the mix of data has come in inconclusive, so that the decision on whether or not to taper in September will be a difficult judgement call for every FOMC member”.
GBP/USD levels
Indicators suggest momentum has slowed down. The 20 DMA is 1.5657, the 50 DMA is 1.5473 and the 200 DMA is 1.5486. Supports are ascending 1.5936 and 1.5963 where the pair trades at currently while resistances are 1.5992, 1.6010, 1.6040 and 1.6080.