- GBP/USD has been licking its wounds from Carney's dovish words.
- US Non-Farm Payrolls and Brexit speculation are in focus.
- Friday's four-hour chart is pointing to further falls.
Is the Bank of England on course to cut rates in the near future? The pound has been struggling to recover from the dovish hints from the bank.
Mark Carney, Governor of the Bank of England, said on Thursday that he may react "promptly" to economic weakness and that the bank has the equivalent of 250 basis points of ammunition to use in case of a downturn. Bond markets reflect higher odds of a rate reduction in the spring.
The BOE rarely had any impact on sterling in recent months, as UK politics were left, right, and center. However, after the Conservatives' landslide win, there is no more drama in parliament and economics have their say. Carney's speech came while the House of Commons cleared the Brexit Withdrawal Bill. It will now be debated in the House of Lords. which is unlikely to cause any significant delays.
The UK is on course to leave the EU at the end of the month and speculation about future EU-UK relations is rife. Prime Minister Boris Johnson remains optimistic about reaching an accord by year-end, while Brussels has its doubts.
With calm in Mid-East tensions, broader markets also focus on economics rather than politics. The all-important US Non-Farm Payrolls is set to show an increase of 164,000 jobs and an annual rise of 3.1% in wages. Real estimates may be higher after robust US figures earlier this week.
See:
- Non-Farm Payrolls Preview: All signs are go
- Nonfarm Payrolls Preview: New year, old data
Expectations may be too high – leaving ample room for a disappointment. The event triggers high volatility.
Overall, the US NFP and Brexit speculation are set to move pound/dollar.
GBP/USD Technical Analysis
Cable remains under pressure after losing the critical 1.3080 level – the confluence of the 100 Simple Moving Average on the four-hour chart and a support line from earlier this week. Momentum remains to the downside and the 50 and 100 SMAs also cap the pair.
Support awaits at 1.3050, the early January high. Next, we find the fresh 2020 low of 1.3010. It is followed by 1.2985 and 1.2950.
This week's highs of 1.3125, 1.3150, and 1.3215 all serve as resistance lines.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD eases toward 0.6500 after mixed Australian trade data
AUD/USD is seeing some fresh selling interest in the Asian session on Thursday, following the release of mixed Australian trade data. The pair has stalled its recovery mode, as the US Dollar attempts a bounce after the Fed-led sell-off.
USD/JPY rebounds above 156.00 after probable Japan's intervention-led crash
USD/JPY is staging a solid comeback above 156.00, having lost nearly 450 pips in some minutes after the Japanese Yen rallied hard on another suspected Japan FX market intervention in the late American session on Wednesday.
Gold price stalls rebound below $2,330 as US Dollar recovers
Gold price is holding the rebound below $2,330 in Asian trading on Thursday, as the US Dollar recovers in sync with the USD/JPY pair and the US Treasury bond yields, in the aftermath of the Fed decision and the likely Japanese FX intervention.
Top 3 Price Prediction BTC, ETH, XRP: Altcoins to pump once BTC bottoms out, slow grind up for now
Bitcoin reclaiming above $59,200 would hint that BTC has already bottomed out, setting the tone for a run north. Ethereum holding above $2,900 keeps a bullish reversal pattern viable despite falling momentum. Ripple coils up for a move north as XRP bulls defend $0.5000.
The FOMC whipsaw and more Yen intervention in focus
Market participants clung to every word uttered by Chair Powell as risk assets whipped around in a frenetic fashion during the afternoon US trading session.