GBPUSD – British Pound Likely Bullish Ahead of BOE Decision02 February, 2017 by Aayush Jindal in Market Analysis
- The British Pound during the past few days traded positively, and broke the 1.2500 resistance against the US Dollar.
- The GBPUSD pair also broke a monster bearish trend line at 1.2470 on the daily chart.
- Today, the UK BoE Interest Rate Decision will be announced by the Bank of England, forecast is 0.25% vs 0.25% previous.
- The UK PMI Construction will be released for Jan 2017 by the Chartered Institute of Purchasing & Supply and Markit Economics, forecast is 53.8 vs 54.2 previous.
- The fed interest rate decision was announced yesterday, and the fed decided to keep rates at 0.75%.
GBPUSD Technical Analysis
The British Pound after a dip below 1.2400 this week against the US Dollar recovered. The GBPUSD pair is now trading higher and looks set for more gains towards 1.2770.
During the recent upside, the pair broke a monster bearish trend line at 1.2470 on the daily chart. Moreover, there was a break above 50% Fib retracement level of the last decline from 1.2774 high to 1.1986 low.
The pair was also closed above the 100-day simple moving average at 1.2470. So, there are many bullish signs. If all goes well the pair may test the 1.236 extension of last decline from 1.2774 high to 1.1986 low. The daily RSI for GBPUSD is also above the 50 level, suggesting more upsides in the near term.
BOE Interest Rate Decision and UK Construction PMI
Today, the UK will witness a couple of major releases like BoE Interest Rate Decision and UK PMI Construction. The interest rates are forecasted to remain at 0.25%. No member of the Bank’s Monetary Policy Committee is expected to vote to a rate hike.
On the other hand, the PMI Construction is forecasted to decline from 54.2 to 53.8 in Jan 2017. So, if the result exceeds the forecast, there is a chance of an upside move in GBPUSD towards 1.2700.
Fed Interest Rate Decision
Yesterday, the Fed Interest Rate Decision was announced by the Federal Reserve. The market was not expecting any change from the last rate of 0.75%. The result was as expected, as there was no change in the interest rates from 0.75%.
The report published by the fed mentioned that the “Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run”.
Overall, the GBPUSD pair may continue to trade higher towards 1.2770-1.2800.