GBP/USD Remains Bid As BoE Officials Endorses Normalization Cycle

GBP/USD outperforms against most of its major counterparts despite the slew of mixed data prints coming out of the U.K. economy, and the British Pound may exhibit a more bullish behavior ahead of Bank of England’s (BoE) December 14 meeting as the central bank looks to further normalize monetary policy in 2018.

Keep in mind, the Monetary Policy Committee (MPC) appears to be in no rush to implement higher borrowing-costs following the dovish rate-hike in November, but Governor Mark Carney & Co. may gradually move away from the highly accommodative stance as Deputy Governor Ben Broadbentwarns against the ‘strain of opinion that EU withdrawal is something that necessarily means lower interest rates.’ As a result, BoE may follow a similar approach to its U.S. counterparts and start the normalization cycle with one rate-hike per year as ‘a majority of MPC members had judged that, if the economy continued to follow a path broadly consistent with the prospect of a continued erosion of slack and a gradual rise in underlying inflationary pressure, some withdrawal of monetary stimulus was likely to be appropriate over the coming months in order to return inflation sustainably to target.’

With that said, the broader outlook for GBP/USD remains constructive as it preserves the upward trend from earlier this year, with the pair at risk of threatening the range-bound conditions from earlier this month amid the failed attempts to test the November-low (1.3040).

GBP/USD Daily Chart

  • GBP/USD may work its way towards the top of the current range as it carves a series of higher-lows, with the Fibonacci overlap around 1.3300 (100% expansion) to 1.3320 (38.2% retracement) largely lining up with the November-high (1.3321).
  • Next topside hurdle comes in around 1.3370 (78.6% expansion) hurdle, which sits just below the October-high (1.3402), followed by the overlap around 1.3450 (23.6% retracement) to 1.3460 (50% retracement).
  • Print Friendly, PDF & Email

    Author: Travis Esquivel

    Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

    Share This Post On

    Submit a Comment

    Your email address will not be published. Required fields are marked *