The Federal Reverse’s upbeat statement on the positivity quantitative easing has on the US economy gave traders the opportunity to sell dollar pairs with the dollar moving well above the lows made earlier this month. Pound Sterling fell for the second weak against the dollar but has kept up well against the euro with speculation that the European Central Bank (ECB) will cut benchmark rates to aid the struggling euro-bloc.
“The pound is down against a strong dollar and winning against a weak euro,” said Adam Cole, head of G10 currency strategy at Royal Bank of Canada. Cole said the Sterling’s fall is less to do with the United Kingdom’s fundamentals, but it’s more to do with increasing positive sentiment towards the US dollar. It is expected for the Pound to continue to increase against the euro as that is more fundamentally positive.
The Bank of England (BoE) will have an interest decision meeting on November 7, and the benchmark should stay level at .5 percent coupled with £375 billion in asset purchases.
The Sterling lost 1.1 percent over the last four weeks and is only behind the Swedish krona in G10 currencies.
The daily chart of GBPUSD is showing price action breaking the uptrend and currently treading water at 1.5912. Friday’s daily candle broke below and closed the 50 EMA, and the -DMI crossed over for a bearish signal. Daily RSI is within the neutral area at 41 but trending downward. A small of support can be found at 1.5878, but 1.5800 is more likely given the newfound buying in the dollar.