Week in FX Europe – Is Sterling’s 8-Cent ride near completion?

Global economic data has tried hard all week to paint more of an interesting picture, and this despite the glaring lack of liquidity (and general interest) in the forex market. Policymakers have been trying to fashion an illusion for something "significant" that will end up having a positive global influence. 

The BoE Governor Mark Carney is one of these policymakers. His work at the BoE has just begun and he has yet to wholly win over his own crew. This week it was revealed that Carney had failed to persuade all of the other members of the BoE’s Monetary Policy Committee (MPC) to back his introduction of a pledge not to raise interest rates until the U.K.’s unemployment number falls - Martin Weale, voted against Carney’s "forward guidance" policy. 

Because of this 'one' holdout, financial markets will continue to question the validity of the MPC’s decision to stick with its pledge to keep the BoE’s benchmark interest rate at +0.5% until the British unemployment rates falls to +7% (currently +7.8%). Cable is over 8-cents higher than last months 1.4814 low. Heavy GBP short selling has also aided the sterling's rise. 

Is the GBP's rally near completion? The mighty dollar will only truly begin to benefit if the Fed starts to taper next month (September 18th). Perhaps the August NFP will be the taper dampener? It's released on September 6th, nearly two weeks before the FOMC announcement. GBP option barriers at 1.5650 and 1.5700 have been keeping the currency on the straight and narrow. The Tech analysts believe that this weekly close above the 200-DMA (1.5524) highlights the underlying bullish market structure. Next stop is the option knockouts!

WEEK AHEAD

* AUD RBA Meeting's Minutes
* USD FOMC Minutes
* USD Jackson Hole Symposium
* EUR German Gross Domestic Product
* CNY China Flash PMI
* EUR Germany Flash Manufacturing PMI
* EUR France Flash Manufacturing PMI
* GBP United Kingdom Gross Domestic Product
* CAD Canada Consumer Price Index

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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Dean Popplewell

Dean Popplewell

Vice-President of Currency Analysis and Research at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell