The British Pound doesn’t “use” the dollar weakness to reach new ground. 1.6660 is one of the strongest resistance lines seen in a long time. The rate statement didn’t include the spice to send the Pound higher.
GBP/USD now trades at 1.6598 after making a trip to 1.6659 and back. Also NZD/USD made a similar round trip. The resistance line is amazing in its strength. While the EUR/USD, USD/CHF, AUD/USD and NZD/USD are in new ground, enjoying the dollar’s weakness, the Pound reached the resistance line just today. And it bounced.
1.6660 served as a resistance line many times in the past. It was created on October 30th 2008 when is was a swing peak. It was tested over and over in recent months. For one week in August, GBP/USD traded above this line. But after it fell back down, 1.6660 preserved its status.
Mervyn King and the other BoE members released a rather calm rate statement. Apart from leaving the interest rate unchanged at 0.5%, the historic low, also the Quantitative Easing program remain unchanged at 175 billion.
After they surprised last time with an expansion of the QE program, this statement had no surprises. The Pound initially enjoyed a rally that took it over 100 pips higher, until it reached the resistance line. There, no energy was left for it.
The US dollar has a really bad weak. The first wave of dollar weakness was followed by a second wave. EUR/USD finally broke out of range. In those posts I wrote that the Pound was left behind. Also today, when GBP/USD already got close, it didn’t break the super strong resistance.
Here’s Mohammed Isah’s GBP/USD updated analysis.
Will the Pound make a breakout later?