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22 May 2015
GBP/USD lid turn tighter on Yellen and dollar strength
FXStreet (Guatemala) - GBP/USD is currently trading at 1.5480 with a high of 1.5691 and a low of 1.5467.
GBP/USD has continued along in a sideways drift despite Yellen's speech coming as hawkish with intentions of a rate rise this year. "Delaying action to tighten monetary policy until employment and inflation are already back to our objectives would risk overheating the economy," was the key take away as well as, "For this reason, if the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy."
She added however, "I should stress that the actual course of policy will be determined by incoming data and what that reveals about the economy. We have no intention of embarking on a preset course of increases in the federal funds rate after the initial increase. Rather, we will adjust monetary policy in response to developments in economic activity and inflation as they occur."
There is nothing new here for us but it has underpinned the notion of a rate rise this year and keeps a lid on GBP/USD. Moving across to UK fundamentals, the recent retail's data was a strong catalyst for the demand in the pound of late but bulls may come reluctant to be too long without caution around the outcome of continued austerity in the UK economy under the Conservatives and the risks to the pound on an EU referendum. The ECB front loading QE may, however, offer extra liquidity in to UK assets and be supportive in the medium term. Technically, The 200 week moving average at 1.5894 reinforces overhead resistance. Closes below the 1.55 uptrend will leave the cloud support at 1.5059 exposed.
GBP/USD has continued along in a sideways drift despite Yellen's speech coming as hawkish with intentions of a rate rise this year. "Delaying action to tighten monetary policy until employment and inflation are already back to our objectives would risk overheating the economy," was the key take away as well as, "For this reason, if the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy."
She added however, "I should stress that the actual course of policy will be determined by incoming data and what that reveals about the economy. We have no intention of embarking on a preset course of increases in the federal funds rate after the initial increase. Rather, we will adjust monetary policy in response to developments in economic activity and inflation as they occur."
There is nothing new here for us but it has underpinned the notion of a rate rise this year and keeps a lid on GBP/USD. Moving across to UK fundamentals, the recent retail's data was a strong catalyst for the demand in the pound of late but bulls may come reluctant to be too long without caution around the outcome of continued austerity in the UK economy under the Conservatives and the risks to the pound on an EU referendum. The ECB front loading QE may, however, offer extra liquidity in to UK assets and be supportive in the medium term. Technically, The 200 week moving average at 1.5894 reinforces overhead resistance. Closes below the 1.55 uptrend will leave the cloud support at 1.5059 exposed.