The British Pound positioned its third-consecutive weekly reduction against the US Dollar on a separate stretch of lacklustre English economic survey and a wider USD bounce. Although the coming week’s price increase survey and Bank of England Meeting Minutes could possibly provide the much needed mechanism for a bounce.
A busy week of economic data reveals several potentially substantial swings in the British Pound; however FX option traders are nevertheless aligning themselves for minute volatility as the GBP USD remains in a variable trading range. Several highlights include Producer, Consumer and retail price index price increase figures, Bank of England meeting minutes, jobless claims adjust in data and retail sales growth are all due for discussion in the coming days.
The UK central bank will closely monitor the Bank of England as officials from the former are increasingly wary regarding the price increase and possibly be near the final portion of the accommodative monetary policy. The present BOE prediction points out to inflation rates declining well-below the official target in 2013 and perhaps leaving enough space for further easing.
Similarly aggressive easing from the US Federal Reserve and the European Central Bank had very little motivation to drive the GBP considerably further than the present rate. Yet that could alter on the first indication that the BOE will be the first to hinder inflationary asset buys and the British Pound could negatively react to a hawkish shift in the Bank of England’s minutes. In lieu to that massive end swings in the preceding CPI, PPI and RPI data it could give comparable consequences on the British currency.
Given the exceptionally low volatility probability, it may take significant surprises out of economic data to compel the British Pound out of its constricted trading series. Yet traders are clearly anticipating for some sort of channel to steer the British Pound and would dispute that the coming developments which might have a great chance as any to provide the much needed spark.
From a realistic sense of things the British Pound may need to clear the primary resisting factor of $1.6135 or noteworthy support of $1.6000 to divert the neutral trading pattern bias. Low volatility favours promoting GBPUSD at resistance and purchasing support within its narrow trading sources. Volatility can only linger so low for as long, but with the suspicion of a succeeding major breakout could resolve the GBP trend through a lucid future.