The Bank of England concluded its interest rate policy decision meeting today. It held the official bank rate at 0.5%. It also opted against adding to the Asset Purchase Program, which holds at £375bil, last boosted in July. This decision came with the backdrop of a recovering UK economy, springing out of recession in Q3. The reaction in the GBP/USD is so far positive, but will it be enough against the recent pressure?
BoE statement: (html)
GBP/USD 1H Chart 11/8/2012 7:50AM EDT
Pullback: The GBP/USD clearly has a positive reaction to the Monetary Policy Committee’s less dovish view. End of its QE program should be positive for the sterling indeed. However, the reaction will have to extend further before it can be seen as sustainable against November’s so far bearish month, falling from 1.6178 to near 1.5930. As the 1H chart shows the pullback testing a trendline projected from the November high.
If this reaction is to carry weight, it should push back above the 1.6040-1.6045 cluster which include a previous resistance pivot area and the 200-hour SMA. Clearing 1.6050 should at least put the focus to the 1.6170-1.6180 November high, and resistance pivot from mid-October.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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