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Pound Poised to Move Higher Following BOE Rate Hike Comments

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The GBPUSD rallied on The Bank of England Governor’s remarks, with Carney saying said that the next move would likely be a rate hike in the United Kingdom. He was speaking at the press conference presenting the latest Quarterly Inflation Report.

Although the BoE won’t be in any rush to hike rates as monetary conditions have tightened amid the recent decline in inflation, Caney acknowledged the firmer levels of the pound which will play a role in subduing inflation.  Theoretically, the stronger pound will reduce exports as fewer consumers will purchase goods from the UK.

The stance of the central bank stands in contrast to many other central banks, a backdrop that should render the pound a robust currency. Sterling to hold up better against the euro and move to a fresh trend low.

The BoE Governor Carney said they have many more options if more stimulus is needed, but added that “we expect strongest real income growth in over a decade, as a consequence of that our view is that the most likely more is a monetary tightening”. Carney also said that inflation expectations are consistent with the 2% inflation target. He stressed that while the “most likely next move in monetary policy is an increase in interest rates, “they will be limited and gradual in pace”.

The technicals on the GBPUSD are solid as the pound edges above a downward sloping trend line that is resistance near 1.5337.  A close above this level would target the 1.5750 area. Support on the currency pair is seen near the 10-day moving average at 1.52.  Momentum is positive as the MACD (moving average convergence divergence) index is printing in positive territory with an upward sloping trajectory.

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The post Pound Poised to Move Higher Following BOE Rate Hike Comments appeared first on Forex Circles.

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