The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
GBP/USD tests 50-DMA
Last week saw GBP/USD flirt with hitting a new five-year high; this did not happen in the end, however. In the run up to yesterday’s UK inflation report, markets had begun to factor in chances of the Bank of England timeline for raising interest rates being brought forward. Somewhat surprisingly though, in the end this was not the tone that Mark Carney set. Instead he stated that when rates did rise they would do so at a slow pace and then be maintained at an historical low for some time.
Forward guidance has been the key backbone of the BoE’s policy since the Canadian took over, and he has now created a track record of sticking to his guns. In view of this, it looks unlikely that the central bank will suddenly surprise the markets without first giving it due warning.
Now that the pairing’s rate has dropped by 250 pips and is currently resting just above the 50-day moving average, drifting towards the longer-term trend line and edging towards oversold on the RSI, we might see levels tempting enough for the buyers to come back to the market.