GBP/USD: waiting for Carney
GBP/USD tested levels below $1.5500 today. Even weaker-than-expected data from the US released yesterday failed to bring sterling above Friday’s high at $1.5637. Yesterday the BoE policymaker Martin Weale said it may be “sensible” for the central bank to extend asset purchases in some circumstances. The pair’s currently trying to find support at the 200-day MA ($1.5509). Further support lies at $1.5420 and $1.5370. Resistance is at $1.5605, $1.5640 and $1.5700.
The Bank of England’s Governor Mark Carney will speak tomorrow at 11:45 GMT. This will be his first public speech since taking the helm of the central bank on July 1. On Aug. 7 Carney said that the central bank plans to hold its benchmark interest rate at 0.5% until the unemployment rate falls to 7% which it doesn’t see happening until Q4, 2016. Investors bet that on Wednesday Carney will affirm his intention to hold borrowing costs at an all-time low.
UBS: «Carney will of course defend forward guidance and try to anchor market expectations, so the anticipated course would be a downside move in sterling. If anything, the communication will be much stronger.”
Barclays: “We would hedge for the risk that he uses the occasion to talk down rates more aggressively.” Further support lies at $1.5420 and $1.5370.
Chart. Daily GBP/USD