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GBP/USD is able to go higher

By Mark Jensen

GBP/USD keeps trading in the $1.6800 area. On Thursday the pair touched the highest level since 2009 on the dovish comments from the Fed’s Chairwoman Janet Yellen, while pound was boosted by the UK’s strong jobs and wages data released on Wednesday.

It seems that Yellen has decided to calm investors who were worried of sooner monetary tightening as US economy is gaining momentum. So far, the economic data in the US is strong, but not too strong, so the Fed still is able to make the market calm down. In Britain the unemployment rate fell from 7.2% to 6.9%, while average earnings index rose by 1.7% vs. 1.5% expected. This strengthened the expectations for the Bank of England’s rate hike in the first quarter of 2015. Although British central bank may not be entirely happy with such an advance in GBP, it’s not likely to somehow make the national currency go lower. On Wednesday the BoE will publish the MPC meeting minutes, so the regulator’s attitude might become a bit clearer. As the UK economy looks really good, GBP/USD can test even higher levels – $1.6900 and $1.7040 don’t look unrealistic. To break above we need a move above $1.6877 (Nov. 2009 high). Still, a move to 2009 highs will likely be the final increase.

As for the near term there’s was a small shooting star candle on Thursday. Support lies at $1.6750, $1.6685 and $1.6600 ahead of $1.6475. The pair may be trading mainly in the $1.6800/6700 in the near term.

Chart. Daily GBP/USD

To contact the writer of this story: Mark Jensen at analytics@fxbazooka.com

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