GBP Soars On MPC Meeting, Employment Data

A surprising unanimous decision by the Bank of England Monetary Policy Committee to drop its call for more QE, plus much better-than-expected labor market data that added credibility to the MPC’s view that the recovery is “becoming more firmly established” sent GBP/USD sharply higher. The fact that the new BoE Governor, Mark Carney, was no longer pressing the MPC for further easing (unlike his predecessor) took the market by surprise. The MPC decided instead to follow a “mixed strategy” that includes forward guidance and other unspecified policy instruments. It seems to me that Gov. Carney forged a policy at his first meeting that all the members could agree on and left the harder discussions for the August MPC meeting, when they are going to make clear “both the quantum of additional stimulus required and the form it should take.” I would expect GBP to weaken again as the 1 August MPC approaches and speculation about further easing measures heats up.

Technically speaking, GBP/USD rose above 1.5180, a significant resistance comprising of a previous high and 200-day moving average (4H) . Nevertheless after the big move it lost some of its gains and as at the point of writing is testing that level that has turned support now. There is significant resistance at 1.5280 now ,which upon breakout would complete a reversal on the current downtrend and could see the pair fly towards 1.5430 and continue to rise. Support comes at 1.5050 and 1.4950.
GBP/USD" width="1523" height="720">
Disclaimer: This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research. IronFX may act as principal (i.e. the counterparty) when executing clients’ orders. This material is just the personal opinion of the author(s) and client’s investment objective and risks tolerance have not been considered. IronFX is not responsible for any loss arising from any information herein contained. Past performance does not guarantee or predict any future performance. Redistribution of this material is strictly prohibited. Risk Warning: Forex and CFDs are leveraged products and involves a high level of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent advice if necessary. IronFx Financial Services Limited is authorised and regulated by CySEC (Licence no. 125/10). IronFX UK Limited is authorised and regulated by FCA (Registration no. 585561). IronFX (Australia) Pty Ltd is authorized and regulated by ASIC (AFSL no. 417482)