{"id":3815,"date":"2009-09-15T12:59:41","date_gmt":"2009-09-15T17:59:41","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=3815"},"modified":"2009-09-15T12:59:41","modified_gmt":"2009-09-15T17:59:41","slug":"gbpusd-reverses-quickly-following-gov-kings-statements","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2009\/09\/15\/gbpusd-reverses-quickly-following-gov-kings-statements\/","title":{"rendered":"GBP\/USD Reverses Quickly Following Gov King\u2019s Statements"},"content":{"rendered":"

By Fast Brokers<\/strong> – The GBP\/USD is dropping like a rock today while the EUR\/GBP soars following a dovish statement from BoE Governor King.\u00a0 King said the BoE is leaning towards decreasing the deposit rate it pays banks on reserves they park at the central bank.\u00a0 Such a decision would encourage banks to lend more and increase liquidity in the system.\u00a0 The continual dovish monetary stance of the BoE is punishing the Pound relative to other currencies.\u00a0 It seems the central bank is intent on pumping up liquidity despite this week\u2019s improvement in pricing.\u00a0 Today\u2019s CPI and RPI data beat expectations along with a strong rise in Input PPI last week.\u00a0 However, Governor King is not impressed, and it appears the BoE may even add onto the balance of its QE program at the next policy meeting.\u00a0 The last time King applied a monetary shock we received a stream of negative economic data from Britain, thereby justifying the BoE\u2019s action.\u00a0 Is King preparing us for another set of disappointing economic data?\u00a0 We will find out tomorrow since Britain will print its CCC data.<\/p>\n

Meanwhile, gold and the EUR\/USD are holding up relatively well despite the large pullback in the Cable.\u00a0 If the BoE continues to take measures devaluing the Pound, then we may begin to witness a more consistent divergence in correlation among the major currency crosses.\u00a0 In fact, King\u2019s intention may be to create an environment conductive of a weaker Pound in order to attract more global demand for Britain\u2019s services and manufactured goods.\u00a0 The central banks are clearly starting to make more individual judgements regarding their monetary policy after the banks acted in unison during the height of the economic downturn.\u00a0 We will monitor the behavior of the GBP\/USD and EUR\/GBP closely over the next 24-48 hours to see whether the dramatic divergence in performance abates following the psychological monetary shock issued by King.\u00a0 Investors should keep in mind the last monetary shock from the BoE resulted in an incessant leg down.\u00a0 Therefore, the GBP\/USD could have more negative territory ahead of it in the near-term.\u00a0 However, the BoE didn\u2019t actually enact any policy, only implied the possibility of an event occurring.\u00a0 Therefore, the pullback might not be as dramatic as when the BoE surprisingly added onto its QE package.<\/p>\n

Technically speaking, the pullback taking place in the Cable today is large and abrupt.\u00a0 The sharp reversal in the GBP\/USD is accompanied by a shot of sell-side volume.\u00a0 Therefore, there is obviously weight behind today\u2019s movement.\u00a0 The currency pair has dropped beneath the psychological 1.65 level and 9\/9 lows, both negative technical developments.\u00a0 The next question will be whether the GBP\/USD can hold onto the bottom of the 8\/19-8\/24 trading range along with our 2nd tier uptrend line.\u00a0 Ultimately, our new 1st tier uptrend line serves as the most important gauge in regards to the currency pair\u2019s near-term uptrend since it connects through September lows.\u00a0 However, our 1st tier uptrend line is still sitting far off in the distance.\u00a0 As for the topside, the GBP\/USD must now deal with all three of our downtrend lines along with the psychological 1.65 level.\u00a0 A positive development today would be for the Cable to close above 1.65 and our 2nd tier uptrend line.\u00a0 We are negative on the GBP\/USD for the immediate-term due to the developments today regarding Britain\u2019s monetary policy.<\/p>\n

Present Price: 1.6475<\/p>\n

Resistances: 1.6495, 1.6524, 1.6551, 1.6570, 1.6595, 1.6622<\/p>\n

Supports: 1.6455, 1.6431, 1.6402, 1.6388, 1.6366<\/p>\n

Psychological: 1.65<\/p>\n

\"\"<\/a><\/p>\n

Market Commentary<\/strong><\/em> provided by Fast Brokers<\/strong><\/span><\/a>.<\/p>\n

Disclaimer:<\/strong> FastBrokers\u2019 market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell\/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.<\/p>\n

Risk Disclosure:<\/strong> There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Fast Brokers – The GBP\/USD is dropping like a rock today while the EUR\/GBP soars following a dovish statement from BoE Governor King.\u00a0 King said the BoE is leaning towards decreasing the deposit rate it pays banks on reserves they park at the central bank.\u00a0 Such a decision would encourage banks to lend more … <\/p>\n

Continue reading “GBP\/USD Reverses Quickly Following Gov King\u2019s Statements”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-3815","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/3815","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=3815"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/3815\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=3815"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=3815"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=3815"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}