British Pound May Rise on Hawkish Turn in BOE Rate Hike Outlook
All eyes are on the Bank of England in European trading hours as traders brace for a volatile trading day on Thursday and it is said that even if they raise interest rates Cable could still tumble. The pair finally broke below the 1.3100 handle, marking the neckline support of a bearish head & shoulders chart pattern on the 4-hourly chart. Although Cable has traded back up to the support region I would wait until a close below before adding another short position to cement the support now resistance level.
INFLUENTIAL INSTITUTIONS & PEOPLE FOR THE GBP/USD
The Pound VS Dollar can be seriously affected by news or the decisions taken by two main central banks:
The Bank of England
The Bank of England is the central bank of the United Kingdom. Established in 1694 and privately owned in the beginning, the Bank was nationalized in 1946 so now is completely owned by the UK government. BOE’s main reason to be is to maintain monetary and financial stability in the country. Some of its other tasks are producing secure bank notes, operating asset purchase facility and keeping the inflation low and stable. The bank is overseen by the Court, named used to refer the board of directors, and is accountable to Parliament and the public.BOE Official Website, on Twitter and Facebook
The European Central Bank (ECB)
The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone and maintain price stability, so that the euro’s purchasing power is not eroded by inflation. The ECB aims to ensure that the year-on-year increase in consumer prices is less than, but close to 2% over the medium term. Another of its tasks is the one of controlling the money supply. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council and the General Council. Mario Draghi, member of the Executive Board, is also the President of this organism.ECB Official Website, on Twitter and YouTube
The GBP/USD (or Pound Dollar) currency pair belongs to the group of ‘Majors’, a way to mention the most important pairs in the world. The pair is also called ‘The Cable’, referring to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term originated in the mid-19th century, which makes it one of the oldest currency pairs.
Pound Dollar represents two economies: British and American (from the United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, this pair has been suffering some turbulence due to risk related to the abandonment process from the European Union.