Dollar bulls received some stability following Tuesday’s firm US Q3 GDP announcement of 2.1% which intensified the growing expectations of a US interest rate increase in December. Data from the States has pointed towards a recovery in the month of November, and with previous concerns regarding the potential slowdown in economic momentum in the US economy quelled, sentiment towards the Dollar has become sanguine. Today’s impressive US GDP release has provided the Fed another compelling reason to raise US interest rates and bullish investors have received further encouragement to propel the Dollar Index higher back towards the psychological 100 level.
The Sterling depreciated across the global currency markets as Mark Carney failed to provide a date on when the Bank of England (BoE) may start raising UK interest rates during his testimony to the UK treasury committee. Market participants were left empty handed and acknowledged his inability to give a concise date on when the Bank of England will take action, as a sign that UK interest rate hike expectations may be pushed back further. With the Bank of England’s reluctance to raise UK rates clearly visible, any chance Sterling bulls have of bouncing back within the GBPUSD may have been sabotaged. Today confirms that last week’s relief rally in the GBPUSD had nothing to do with the improved sentiment towards the Sterling and that it in fact simply offered an opportunity for bearish investors to send prices lower.
Technically the GBPUSD is bearish and the 1.5100 support has been breached which may act as a dynamic resistance that should invite an opportunity for sellers to send prices back down towards 1.5000.
The next major focus for the USD this week will be the latest core durable goods on Wednesday, and any further signs of recovery in the US economy may add to the factors which provide a strong case for the Fed to raise US interest before year end.
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