GBP/USD analysis: Carney's 180 degree turn on rates fuels Pound

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2930

The Sterling soared to as high as 1.2971 against the greenback, its highest since June 8th, as BOE's Carney surprised market players with a 180 degree turn on monetary policy. Carney said that an interest rate hike will be "necessary" if the global recovery continues, leading to stronger wage growth. Additionally, he said that the global recovery was becoming "broad-based" and that "some removal of monetary stimulus is likely to become necessary if the trade-off facing the MPC continues to lessen and the policy decision accordingly becomes more conventional." The pair retreated from the mentioned high but stabilized above the 1.2900 level. Brexit headlines have been out of focus for nearly a week, but can return to hit Pound any time, although now that PM May got support from the DUP, negative news are not expected short term. In the meantime, the 4 hours chart shows that the 20 SMA has extended its advance below the current level, now nearing the 200 EMA and with technical indicators having turned flat within extreme overbought levels, supporting some consolidation ahead, before the next directional move. Early June high of 1.2977 is the immediate resistance, with a stronger one in the 1.3050 price zone, from where the pair retreated late May.

Support levels: 1.2760 1.2720 1.2670

Resistance levels: 1.2820 1.2855 1.2900

View Live Chart for the GBP/USD

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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