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GBP/USD Collapses as Support for QE Rises

UK jobless claims, known as Claimant Count Change, dropped by 12.5K in January 2013. A fall of 5.3K was expected after last month’s big drop of 12.1K (before revisions). The unemployment rate for December 2012 was was 7.8%. No change from 7.7% was expected. The meeting minutes brought the pair down around 100 pips.GBP USD Free Falling on MPC Meeting Minutes February 20 2013

GBP/USD traded quite actively between 1.5420 and 1.5450 before the publication. The pair collapsed to 1.5350 and the move is still in motion.  Update: the pair hit a trough of 1.5335 so far – a huge collapse.

The Monetary Policy Committee decided to leave the rates unchanged in a unanimous vote. The more interesting part was the vote on the Asset Purchase Facility, or the Quantitative Easing program: more pound printing received more support: 3 out of 9 members voted for an expansion.

And another interesting note is that the governor of the Bank of England, Sir Mervyn King, was one of the three members voting for and expansion. He was in a minority.

Sterling was hit yesterday by a rumor of a credit rating downgrade. This rumor proved to be false. Nevertheless, GBP/USD falied to recover and remained depressed well below 1.55, at a 7 month low. It reached a low of 1.5416. If this level is broken, support appears at 1.5370. Resistance is at 1.55.

For more, see the GBPUSD forecast.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.