FOREX Watch: GBP/USD hits 9-month high in euro session
The GBPUSD hit a nine-month high following an upbeat reading of the Bank of England’s September meeting minutes. Policymakers expressed a great deal of optimism about UK recovery, agreeing no more stimulus is presently needed. The central bank’s benchmark lending rate was kept at 0.5 percent in September. The asset purchase facility is currently valued at £375 billion.
The British pound advanced for a fourth consecutive day against its US counterpart. The pound has gradually strengthened over the past several months as the UK economy continues to gain traction. The GBPUSD has advanced more than 5.2 percent over the past six months.
Britain’s rate of unemployment has gradually declined throughout the summer. Official data showed unemployment claims dropped 32,600 last month, beating expectations by more than 10,000. Jobless claims declined 29,400 and 29,200 in June and July, respectively. The unemployment rate for the three months ending in July declined from 7.8 percent to 7.7 percent.
The boost in economic activity over the summer compelled the Monetary Policy Committee to update its growth outlook for the remainder of 2013, the minutes showed. Policymakers expect third quarter growth to be 0.7 percent, up from an initial forecast of 0.5 percent in last month’s Inflation Report.
The short-term outlook for GBP/USD, and by extension all other US dollar pairs, will be determined by the pace and timing of Federal Reserve asset tapering. Ben Bernanke and co. decided to avoid tapering the central bank’s bond purchases this month, a move that will continue to support GBPUSD over the near-term.
The GBPUSD was trading on a gain of more than 1.2 percent in Wednesday’s New York session, settling at 1.61. The pair made it through the 1.5947 resistance in the European trade, before bursting through the next two resistance lines following the Fed’s decision to keep asset purchases at $85 billion.
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