GBP/USD recap for 18.09.2015
The day for the Pound also started in the green as the price opened at 1.55855 made a 70 pips up to the high of 1.56586 and dropped 144 pips to the low of 1.55130 just to close in at 1.55237. Dollar glut is one catalyst for this event, but also we had BOE's Haldane speaking. His comments were few, but I think enough to shift the pair's move south. Haldane stated:
- There is still spare capacity in the UK economy (dove)
- UK is in first and second gear and is growing at trend (dove)
- UK economy is doing fine and has strength (a softer tone)
All seems good right? Wrong. Actually I think Haldane didn't made any actual and motivating points for the pound to strengthen that day as all others failed against the dollar. No comments on inflation or FOMC aftermath, but lets not forget that inflation in the UK is moving a lot better than the US, and it could change their view on their own rate hike. They may understand that they do not need to wait for the FED to act, as US inflation is slacking because offshore reasons. UK is fine. Exports are going well, wages are going up, people spend, construction is advancing. As noted, after the inaction of the FED, other Central Banks may decide to act on their own. Starting with the UK and then EU. US will lag behind, and we won't see a rate hike from the US anytime soon.
If the pressure on the gbp continues I see it falling again to 1.54761 and then to 1.54245 if the above level is broken.