GBP/USD analysis: back above 1.3400 but BOE next

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3408

UK PM Theresa May lost a key Brexit vote, Brexit deal will have to be approved by the Houses.
The Bank of England is expected to be a non-event, but rising inflation could force it to act.

UK employment figures released at the beginning of the day offered disappointing headlines, as the number of people looking for unemployment coverage during November almost doubled market's expectations with 5.9 K, while the unemployment rate, remained steady at 4.3% against expectations of 4.2%. However, and in the three months to October, average wages excluding bonus, were 2.3% higher, better than the previous 2.2%, while including bonuses, annual wage growth accelerated from 2.3% to 2.5%. Wages' growth partially offset the poor headlines, helping GBP/USD bounce from its daily lows around 1.3310. During the US afternoon, Brexit headlines affected Pound only marginally, as it was all about dollar's weakness post-Fed, but UK PM Theresa May lost a key Brexit vote in the Parliament, by 309 to 305: any Brexit deal will have to be approved by the Houses. The Bank of England is having its monetary policy meeting this Thursday, mostly expected to be a non-event, but seems hard Carney can ignore the latest spike in inflation to new highs.

The GBP/USD pair traded as high as 1.3427 failing to overcome a Fibonacci resistance, but presenting a positive short-term tone anyway, as the price recovered above its 20 SMA, now with no directional strength, as technical indicators entered positive territory for the first time this week, although with no strength upward. The pair will need to surpass the mentioned high to extend its gains but would take a hawkish surprise from the BOE to push it beyond 1.3500 this Thursday.

Support levels: 1.3385 1.3345 1.3310

Resistance levels: 1.3430 1.3465 1.3500

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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