The Great Britain Pound rose against the U.S dollar in last week’s trading session after the Bank of England MPC meeting minutes unveiled that policymakers voted unanimously in April to keep the Bank rate unchanged at 0.5% and the asset-purchase program at 375b pound.
The minutes also suggested that all members agreed that it was appropriate to leave the monetary policy unchanged at the meeting, although 2 members regarded the decision as ‘finely balanced’. Besides suggesting the rate path expected by the market was too flat, the BOE also noted that inflation expectations had shown signs of stabilization after recent weakening and judged that the low rate of inflation would not lead to delays in households spending. Overall, the tone of the minutes was viewed as rather hawkish.
Meanwhile in the U.S, the dollar weakened after the Commerce Department reported that orders for durable goods, excluding aircraft, fell 0.5% in March, after a downwardly revised 2.2% drop in February.
The headline figure rose 4.0%, beating expectations for a 0.6% gain, but investors focused on underlying weakness in the report.
The data came after recent weak reports on home sales, retail sales and industrial production, adding to signs of a slowdown in economic growth since the start of the year.
The weak data added to pressure on the dollar which has been hit as investors pushed back expectations on the timing of an initial rate hike by the Federal Reserve.
The pair bottomed out after forming a support at 1.4564 and initial bias this week remains on the upside for further rise as 21 crosses 55 EMA northward on the 4 hours time-frame. Our focus will be on on 38.2% retracement of 1.7190 to 1.4564 at 1.5550. We’d be cautious on strong resistance from there to limit upside and bring near term reversal. On the downside, break of 1.4856 minor support will argue that such rebound is finished and will turn bias back to the downside for retesting 1.4565 low instead.
In the week ahead investors will be looking to Wednesday’s Fed statement for clues on the possible timing of a rate increase. Investors will also be focusing on Wednesday’s preliminary reading on U.S. first quarter growth as well as reports on inflation, consumer confidence and manufacturing. The U.K. is to release an initial estimate of first quarter growth on Tuesday.