GBPUSD Movement
For the 24 hours to 23:00 GMT, the GBP rose 1.32% against the USD and closed at 1.2463, after UK’s High Court ruled that only Parliament could start the process of leaving the European Union, thus raising hopes of a “soft Brexit”.
Pound was boosted further, after the Bank of England (BoE), scrapped plans to cut interest rates, citing unexpected improvements in the nation’s economic growth.
The BoE, in its latest monetary policy meeting, held the benchmark interest rate steady at a record low 0.25%, in line with market expectations, after the British economy showed unexpected resilience following the Brexit vote. In its quarterly economic forecasts that accompanied the rate decision, the central bank raised its 2017 inflation forecast to 2.7% from its August estimate of 2.0%, citing the pronounced tumble in Sterling. Further, the BoE also revised up its economic growth forecast. The bank now expects UK economy to grow by 2.2% in 2016, 0.2% higher than its previous forecast while the bank’s GDP estimate for 2017 has been catapulted skywards to 1.4%, from 0.8%. Further, the BoE Governor, Mark Carney, stated that the central bank is ready to tighten or ease monetary policy in response to inflation developments.
In other economic news, data showed that UK’s Markit services PMI rose unexpectedly to a level of 54.5 in October, accelerating at the fastest pace in nine-months and confounding market expectations for a drop to a level of 52.5. The index recorded a level of 52.6 in the previous month.
In the Asian session, at GMT0400, the pair is trading at 1.247, with the GBP trading 0.06% higher against the USD from yesterday’s close.
The pair is expected to find support at 1.2363, and a fall through could take it to the next support level of 1.2257. The pair is expected to find its first resistance at 1.2535, and a rise through could take it to the next resistance level of 1.2601.
With no economic releases in UK today, market participants would closely monitor Britain’s industrial and manufacturing production for September, NIESR GDP estimate and total trade balance data for September, all due to release next week.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
