Article by ForexTime
The GBP/USD rebounded on Thursday and continued to move higher following the FOMC meeting minutes, which were released on Wednesday afternoon. The minutes somewhat surprised market participants, as the Fed seems to be concerned about global growth and declining inflation expectations, which could keep the central bank on hold a lot longer than expected.
In the UK, the Bank of England monetary policy commitment left policy on hold, as was widely anticipated. This leaves the repo rate at 0.5% and the bond purchase program total at 375 billion pounds. There is no statement, which normally occurs following unchanged decisions, rendering the announcement a non-event for markets. The minutes will be published in two weeks on October 22, 2014. While the minutes will likely show MPC members McCafferty and Weale dissenting in favor of a 25 basis point repo rate hike for a third consecutive month, the other seven Committee members are likely to vote for unchanged policy.
U.K. data Thursday showed signs of slowing recovery pace with the September RICS house price balance coming in at +30%, down on the median expectation for 36%, while the BCC’s quarterly economic survey showed the slowest export growth in nearly two years.
The GBP/USD recaptured the 10-day moving average, which is now seen as short-term support near 1.6125. Resistance is seen near the September highs at 1.6510. Momentum on the currency pair has turned positive with the MACD (moving average convergence divergence) index generating a buy signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) cross above the 9-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal.
The weekly chart of GBP/USD shows that the currency pair is in a downtrend and is currently consolidating near the highs made in November of 2012. The 10-week moving average is seen near 1.64, which could be the next level of target resistance. Support is seen near the weekly lows at 1.5950.
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