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Pound gains steam on solid employment report

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Pound gains steam on solid employment report

Sterling was one of the most active currencies ahead of Ben Bernanke’s testimony in front of Congress on Wednesday as traders reacted to the BoE meeting minutes and stronger than expected UK employment data.

The strong UK employment report is consistent with recent of data that is better than expected reflecting a mild recovery in the jobs sector. The claimant count fell 21.2k, more than twice the decline expected, and the May count was revised to show a 16.2k drop instead of the 8.6k decline initially reported.

The BoE minutes showed a unanimous decision to keep rates unchanged and to hold off on any bond purchases. The most significant change was the installation to the new governor of the BoE Mark Carney who is likely to set a path where greater communication and guidance will come from the UK central bank.

The question and answer session from Fed Chairman Ben Bernanke was the driving force behind currency movements. The statement released by the Chairman was relatively dovish as he stated that employment was well below the satisfactory level. Inflation was below the Fed’s target and the bond purchase could stay below or above the current levels providing the ambiguity that market participants generally expect.

Sterling climbed more than a big figure, testing the 1.5250 level, which coincides with the 50-day moving average.  Support on the GBPUSD currency pair is seen near the 10-day moving average at 1.5055.  Momentum on the currency pair is improving at the MACD generated a buy signal as the index moved from negative to positive territory.  The RSI broke higher along with price action, while printing near 50 which is in the middle of the neutral range well below the overbought trigger level of 70.

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