The GBP/USD presents an interesting day of decisions for short-term speculators as the Bank of England gets set to release its Monetary Policy Summary.
- The GBP/USD is trading near the 1.26535 ratio as of this writing.
- Readers are urged to check on the value of the currency pair and compare it to this mark as they look at the GBP/USD in the hours ahead.
- Volatility will factor into the GBP/USD today because of the Bank of England’s Monetary Policy Report and Official Bank Rate rhetoric.
- The BoE is not expected to change its interest rate policy today.
Trading in the GBP/USD produced volatility, and downward momentum remained the central theme for the currency pair yesterday. Speculators who have been anticipating a return to the bullish trend upwards the GBP/USD enjoyed from mid-December until the beginning of January may be disappointed. However it has become clear that financial institutions have turned slightly more cautious regarding the timetable for U.S Federal Reserve interest rate cuts.
Traders need to understand that unless the Bank of England surprises everyone with a change to their Official Bank Rate, the GBP/USD is moving in a USD centric manner and this will remain the situation. Yes, the GBP/USD will move based on the pronouncements of the BoE today, but by tomorrow if the central bank has kept its policy in place the currency pair will remain fixated on impetus via the USD.
The GBP/USD is trading near important mid-term support and current price levels should be watched closely. The currency pair is trading remarkably near values it traversed on the 14th of December, which means financial institutions are leaning towards a stronger GBP/USD but are not committing fully to bullish momentum quite yet. The return back to the ratio of 1.26500 thereabouts, after trading at a high around 1.28280 on the 28th of December shows the trend downwards that has developed. The question for short and near-term traders is if current support levels will prove durable.
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- Today’s BoE rhetoric is certain to cause volatility in the GBP/USD and day traders need definite risk management systems working including entry, stop loss and take profit orders.
- Tomorrow the U.S Non-Farm Employment Change numbers will be published and will throw an additional spark into GBP/USD volatility before going into the weekend.
Technical traders need to be careful. Conservative speculators may want to sit on the sideline in the near-term and see how the GBP/USD reacts after the BoE and U.S jobs numbers. If current support levels prove durable in the near-term this could be a signal some bullish sentiment lingers and could be demonstrated. However, expect the price range of the GBP/USD to remain wide today and tomorrow as support and resistance technical levels are tested.
Current Resistance: 1.26625
Current Support: 1.26495
High Target: 1.27150
Low Target: 1.26210
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