Bank Of England Rate Hike Results In Pound Depreciation

• 3 Nov 2017

GBP/USD

The GBP/USD pair is testing the 1.306 price level after the Bank Of England increased the Bank Rate by 25 basis points. Unusually, the pound fell on the announcement. Hence in yesterday’s session, price action broke both the 1.322 price level and the 20-period EMA. Momentum indicators suggest that the bearish move may not be sustained. The 1.306 price level will prove significant with regards to future price action.

GBP/CAD

The GBP/CAD pair is testing the 1.674 price line which represents a previous resistance area. At the same time, the pair is also testing the 20- period EMA. However, momentum indicators are mixed, with RSI flattening at the 50 support level with MACD remaining in positive territory. Canadian dollar dominance over the Pound does not appear to be backed up by fundamentals, therefore may not be sustained.

EUR/JPY

The EUR/JPY pair has surged from the 131.23 price level, breaking the 20- period EMA. Three consecutive bullish candles indicate positive sentiment in the market, however, this is not backed up by momentum indicators. RSI has flattened in neutral territory where MACD has a downward trajectory. Therefore, the question is whether there is enough conviction from buyers to push prices towards the 134.21 price level.

CHF/JPY

The CHF/JPY pair has bounced back from the 113.78 price level, representing a fairly significant support level and the beginning of a bullish move. RSI has also retraced from the 30 support level. Volume is rising moderately which suggests there may be enough interest from buyers to push prices towards the 114.69 price level.