GBP / USD: verbal intervention today. Trading Recommendation
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Overview and Dynamics
Today, 13:00 (GMT + 3) tomorrow 20:00 calendar planned speech by Bank of England Governor Mark Carney. It is crucial that could affect the monetary policy of the bank, in a speech Carney may not sound, however, the financial market volatility may increase dramatically during this time. Carney knows how to find the words that influence the actions of market participants.
Recall that at its last meeting, the Bank of England did not change its monetary policy in the United Kingdom, leaving its key interest rate unchanged at 0.5%. The bank forecasts growth of consumer prices in the UK are unlikely to accelerate and inflation to remain below 1% for the next 4-6 months. GDP growth in the third quarter was 0.6% compared to 0.7% in the second quarter. A week earlier, data released by the retail trade by the British Retail Consortium (BRC) in the UK, which, though in September showed an increase in annual terms by 2.6%, however, compared to the previous period, they decreased by 1.0%. Also Monday, data released in the indices of housing prices in the UK from Rightmove, showed a decline in October (0.6% compared to 0.9% in September).
The next meeting of the Bank of England's interest rate will be held on November 5, after a similar meeting of the Fed, the ECB, Bank of Japan.
The expectations of the market participants in terms of raising interest rates in the UK have shifted closer to the middle of 2016.
Today, also scheduled performances of key figures the Fed with its head Janet Yellen at 16:15, 16:30 and 18:00. Excess verbal intervention today give increased volatility in USD pairs, including a pair in the GBP / USD.
Technical Analysis
GBP / USD pair has returned to the area of balance in the general declining trend, which can be roughly determined by the level 1.5485 (EMA200) and 1.5440 (EMA144 on the daily chart).
At the same time, the couple has a chance to rise to the resistance level 1.5600 (38.2% Fibonacci level upward correction to decrease since the beginning of July 2014 from the level of 1.7200 to the lows of 2015, reached in April at the level of 1.4600). It also passes the upper line declining channel on the daily chart. Drivers can serve as a statement of Mark Carney and the Fed. OsMA and Stochastic indicators on the 4-hour, daily, weekly charts recommend long positions. Theoretically, further growth is not excluded to the levels of 1.5775 (EMA144), 1.5900 (EMA200 on the weekly chart and Fibonacci level 50%), but is unlikely and can only be supported by fundamental factors, such as the decision of the Fed to refrain from raising interest rates in the United States.
Otherwise, in the most likely scenario, the pair is expected to decline, including after a rebound from levels near the 1.5600 mark, the level of 1.5230 (23.6% Fibonacci level) and then to 1.5100 (the lower line of the downtrend channel. The breakdown level 1.5440 , 1.5380 will accelerate declines.
