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Aug 20, 2014
GBP/USD to test the March low? - Scotiabank
FXStreet (Guatemala) - Camilla Sutton, CFA, CMT, Chief FX Strategist at Scotiabank noted that GBP is strong, outperforming all the majors, but failing to break above the 200‐day MA at 1.6677.
Key Quotes:
The catalyst was the release of the BoE minutes from the August 6/7 meeting, where two members (McCafferty and Weale) voted in favour of a 25bpt interest rate hike. Their reasoning was based on: 1) fall in unemployment and survey evidence of tightening in the labour market could lead to a pick up in wage growth; 2) erosion of spare capacity would like remain rapid; 3) policy would remain supportive even after a 25bpt interest rate hike; 4) delaying a Bank rate increase might increase the risks associated with the first hike."
"GBP/USD short‐term technicals: bearish—all technical studies warn of downside risk but the RSI is only at 31, suggesting there is plenty of downside room before reaching oversold levels. Look for a test to 1.6460, the March low."
Key Quotes:
The catalyst was the release of the BoE minutes from the August 6/7 meeting, where two members (McCafferty and Weale) voted in favour of a 25bpt interest rate hike. Their reasoning was based on: 1) fall in unemployment and survey evidence of tightening in the labour market could lead to a pick up in wage growth; 2) erosion of spare capacity would like remain rapid; 3) policy would remain supportive even after a 25bpt interest rate hike; 4) delaying a Bank rate increase might increase the risks associated with the first hike."
"GBP/USD short‐term technicals: bearish—all technical studies warn of downside risk but the RSI is only at 31, suggesting there is plenty of downside room before reaching oversold levels. Look for a test to 1.6460, the March low."