- Pound rebounds from key technical support but fails to hold above 1.3100.
- US dollar under pressure as vote count continues in the US.
The GBP/USD is rising sharply on Thursday but failed so far to break above Wednesday’s high. Cable remains volatile in a wide range, supported by a decline of the US dollar across the board and is hovering around 1.3100.
The greenback is under pressure. It managed to stabilize over the last hours ahead of the FOMC decision and as market participants await for headlines regarding the US presidential election. The DXY is falling 0.90%, and it tested the October low. In Wall Street, main indexes are up by around 1.60%, off highs.
From a technical perspective, GBP/USD continues to move in a range, supported by the 100-day moving average at 1.2895. On the upside, it is facing difficulties holding above 1.3100. The key resistance is seen around 1.3150.
After BoE, now is the turn of the Fed
Now market participants await the outcome of the FOMC meeting. Earlier on Thursday, the Bank of England announced an increase in its asset purchase program by 150bn, a higher number than expected. “The BoE also said that purchases are expected to run until end-2021, which leaves the headline number less dovish than it appears at first. At the same time, the BoE appears to still be wildly optimistic about growth prospects through 2021-22, so we’re still comfortable with our view that further QE will need to be announced around mid-2021, though with today’s larger increase in QE stock, the announcement can probably wait until Q3 2021 rather than Q2”, explained analysts at TD Securities.
The Fed is unlikely to surprise markets and considering the focus is on the election, it is a meeting that could be ignored by market participants.
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