The Great Britain pound slipped against dollar on Tuesday after reports showed that CPI fell from 1.8% to 1.6%, weakening the pound after soft U.K. inflation data dampened speculation over rate hikes. The Pound tried to ease off its losses after MPC official Bank Rate Votes came in with a surprise figure but retracement was however limited. Later on Friday, few hours before the week’s trading session ended. Federal Reserve Chair Janet Yellen speech emphasized that the economy continues to improve and with it, the labor market is strengthening as well.
Speaking at the Federal Reserve Bank of Kansas City’s annual Jackson Hole symposium, Janet Yellen said the U.S. economy is recovering and added the labor market is improving as well.
“More jobs have now been created in the recovery than were lost in the downturn, with payroll employment in May of this year finally exceeding the previous peak in January 2008. Job gains in 2014 have averaged 230,000 a month, up from the 190,000 a month pace during the preceding two years,” Yellen said in prepared remarks of her speech.
“The unemployment rate, at 6.2 percent in July, has declined nearly 4 percentage points from its late 2009 peak. Over the past year, the unemployment rate has fallen considerably, and at a surprisingly rapid pace.”
While Yellen pointed out that slack still remains in the labor market, her comments sparked fresh expectations for the Fed to close its bond-buying program around October and raise interest rates in 2015, possibly sooner than once anticipated. A good news for the US dollar to me.
Having derived enough information from the fundamental angle, technically the GBP/USD is on a strong bearish trend and weekly bias remains on the downside. Technically we have 21 and 55 EMA’s still crossed towards southwards signifying more decline is expected. Am expecting more supply to 1.64648 support (March 24 2014 low) as SSRC and MACD oscillators shows more bearish momentum on the 4 hours and Daily time-frames. However am expecting some pull backs to the upside before resumption of more decline, so i suggest selling the rips in this pair in supply zones.
Key fundamental reports to watch out for in the week ahead is the New Home/Pending Home Sales, Preliminary GDP, Consumer Confidence and Core Durable Good Orders.