GBP surge begins, as market sentiment improves
- The BoE warned about the Brexit recession potential which had been impacting the market negatively.
- The US FED Chairman Jerome Powel, spoke of monetary policy shift, delivering a mammoth bull run of GBP.
Earlier today, in the face of a timid BoE comment, GBP had been trading lower against almost all of the major currencies including USD, EUR, AUD and NZD. However, it had been showing slight resilience against the JPY. The market outlook turned gloomier on the BoE comment of Brexit recession potential, as UK PM Theresa May has already behind 7 votes in the House of Commons, which appears to be held on December 10th. During that period, GBP had been trading around 1.2750 region against USD, and there was risk of further downfall. However, the market bias altered significantly, the US FED chairman Jerome Power spoke of a shift in monetary policy, followed by the US President Trump’s criticism regarding continuous rate hikes.
As an aftermath, GBP had been jolted dramatically upward, as it experienced nearly 150 pips of havoc bull run just in an hour. At this moment, GBP has been traded around the 1.2835 and there is significant chance of further upwind momentum, despite Brexit concerns. The next FED meeting will be arranged in December 5thand it is expected that GBP/USD bull run will persist for the next couple of days, while the key resistance level is residing at 1.2890 and on the flipside, the its key support level resides at the 1.2840 region, which appears to unlikely to be broken in this week. A break above its key resistance would test the 1.3125 region (two-month high)
GBP/USD daily price chart
As there has been a bullish bias established in the market, GBP bull-run is likely to persist in the rest of the week, largely due to the dovish monetary shift of FED chairman Jerome Powel, followed by US president Trump’s criticism of continued rate hike. In the long-term outlook, GBP appears to be well-supported against USD and other major currencies including EUR and JPY. However, GBP/AUD and GBP/NZD might tumble in the short-term outlook, ahead of G20 summit, as both of the currencies have been showing tremendous level of stubbornness in the last couple of days, while all of the major currencies had been drowning against USD bull-run.
Read more on GBP outlook here
[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]