The pound gained momentum against the US dollar during the American session. The greenback lost strength after the US GDP report.
GBP/USD back above 1.3100
The pair has been moving all day with a bullish bias, moving at a slow pace. After the beginning of the American session rose further and peaked recently at 1.3136. Currently, it trades at 1.3110/20, up 50 pips for the day.
Cable is near yesterday’s highs that are located around 1.3155. At the moment is testing the 1.3120/30 resistance, a consolidation on top could clear the way for a test of 1.3155. On the downside, below 1.3090 the short-term momentum is likely to shift to the downside.
Week ahead: after Fed, the turn of BoE and NFP
The key event of the week was the Federal Reserve decision. As expected, the FOMC kept rates unchanged and offered signals that the normalization program of the balance sheet could start “relatively soon”. The greenback lost ground across the board after the statement and helped GBP/USD consolidate gains. Next week, the key economic number in the US will be the US official employment report with the non-farm payroll data.
In the UK, eyes point toward Thursday. That day, the Bank of England will announce its decision on rates and will present the Inflation Report. After years of MPC meetings being a non-event for markets, since the Brexit referendum, the situation changed dramatically.
Most analysts expect no change in rates. The latest comments from Carney and BoE officials, showed diverging views, increasing speculations about the trajectory of monetary policy in the UK. “At this meeting, we expect the BoE to vote 6-2 in favor of keeping the Bank Rate unchanged against 5-3 on the previous occasion. The reason is mainly because Kristin Forbes, a known hawk voting for a hike, has left the committee and we do not think the new member will vote against Carney at the first meeting”, said analysts at Danske Bank.
Bank of England to vote 6-2 to keep rate unchanged - Danske Bank
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