FX: GBP/USD Higher After Bank Of England Minutes – 21/11/12 Analysis
The British pound has rallied close to a two-week high versus the greenback today. This comes as the BOE (Bank of England) meeting minutes indicated that additional monetary easing measures, and increasing the stock of gilt purchases, was unlikely in the near term. Members of the MPC were unanimous in their rejection of a rate cut from the already record low 0.5pc to 0.25pc.
The latest upside move started on the 15th November, as a base formed around the 1.5826 level. This area was marked by a converging 100 and 200 period SMA (simple moving average).
Today’s data from the BOE shows what appears to be a gradual shift away from its easing cycle. There was in fact only a single vote in favour of additional monetary easing measures at this month’s policy meeting, as the BoE vote on quantitative easing came in at 8-1 against; Bank of England policy maker David Miles was the lone voter for additional QE. The weight of sentiment against further QE came as something of a surprise as many analysts thought a close vote could have been seen within the committee.
Pound/Dollar Technical Overview -
- The pound /dollar is now trading just under the 38.2% Fibonacci retrace of the last major move lower from 1.6300 highs (1.6300 marks a key resistance area).
- 1.6000 is closely aligned with the 50% retrace of the same swing down, which is approximately 65 pips to the upside at the time of writing this post.
- The pound is currently up 0.34% versus the dollar and has risen as high as $1.5947 intra-day, the highest level seen since November 9th.
- GBP/JPY is trading near a seven-month high, around 131.59 and pushing above trend line resistance, as the yen has broadly under performed. The pound is lower versus the euro, with EUR/GBP up 0.26% on the day at 0.8040.