Ref­er­en­dum dom­i­nates GBPUSD

Financial Mirror (Cyprus) - - FRONT PAGE -

The up­com­ing Scot­land ref­er­en­dum com­pletely dom­i­nated UK eco­nomic head­lines last week, with the GBPUSD fall­ing to its low­est level since Novem­ber 2013 (1.6051) when the prospect of an in­de­pen­dent Scot­land con­tin­ued to gain un­ex­pected mo­men­tum at the be­gin­ning of the week.

From here, com­ments from Bank of Eng­land (BoE) Gov­er­nor Car­ney that an in­ter­est rate hike can be ex­pected around Spring 2015, along­side “No” votes for Scot­tish in­de­pen­dence re­gain­ing the lead, en­cour­aged the Cable to re­cover losses.

With such a pe­riod of po­lit­i­cal un­cer­tainty un­com­mon for the UK, this pair should con­tinue to move un­pre­dictably over the next few days.

If “No” votes win, the GBPUSD has the po­ten­tial to move back to the 1.66 area where the pair was trad­ing be­fore the “Yes” vote be­gan to be priced into mar­kets. How­ever, if “Yes” wins, it will be dif­fi­cult to fore­cast what could hap­pen to the pair. Down­side pres­sure should ac­cel­er­ate, with it even pos­si­ble the Cable could de­pre­ci­ate by a sud­den 10%. From a tech­ni­cal stand­point on the Daily time­frame, the GBPUSD has sur­pris­ingly re-en­tered the bear­ish chan­nel which looked cer­tain to have con­cluded only a week ago. With the Scot­tish ref­er­en­dum now only hours away, this pair is ex­pected to con­tinue trad­ing with high vo­latil­ity.

Po­ten­tial re­sis­tance can be found at 1.6350 and 1.6441, while support is lo­cated around 1.6190 and the cur­rent yearly low, 1.6051.

Mar­kets Re­port by Forextime Ltd

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