CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

GBP USD surges on BOE remarks US retail sales

Article By: ,  Financial Analyst
July 14, 2015 9:14 PM

GBP/USD (daily chart shown below) surged on Tuesday after Bank of England Governor, Mark Carney, suggested that the time for a rise in interest rates may be getting closer. Also contributing to the GBP/USD rise was a US dollar drop due to a disappointing US Retail Sales report for June that showed a -0.3% change on consensus expectations of a 0.2% gain.

Carney stated, “the point at which interest rates may begin to rise is moving closer with the performance of the economy, consistent growth above trend, a firming in domestic costs, counter-balanced somewhat by disinflation imported from abroad.”

Together, Carney’s remarks along with the retail-driven drop in the dollar prompted a substantial climb for the GBP/USD that tentatively broke out above key 1.5600 resistance. This climb significantly extends last week’s major rebound off the 200-day moving average. In turn, that rebound followed a three-week plummet from the year-to-date high of 1.5928 in mid-June.

 

Besides rising above the noted 1.5600 resistance level, Tuesday’s surge also nudged the currency pair slightly above a short-term downtrend resistance line extending back to June’s 1.5928 high. Any further upside momentum above 1.5600 should be limited by major resistance around the 1.5800 level.

While the time may indeed be closer for a rise in UK interest rates, a rate hike in the UK will most probably occur well after a US rate hike. If this is to be the case, with respect to GBP/USD, any rate-driven rise in the pound should likely be tempered by a potentially equal or greater rate-driven rise in the US dollar.

Any rebound in US dollar strength after Tuesday’s pullback could provide an impetus for a GBP/USD retreat and a continuation of the bearish move back down towards 1.5200 support.

Other potential upcoming catalysts for GBP/USD movement are the US Producer Price Index and UK unemployment data in the form of the Claimant Count Change, both set to be released on Wednesday.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024