Global economic data has tried hard all week to paint more of an interesting picture, and this despite the glaring lack of liquidity (and general interest) in the forex market. Policymakers have been trying to fashion an illusion for something “significant” that will end up having a positive global influence.
The BoE Governor Mark Carney is one of these policymakers. His work at the BoE has just begun and he has yet to wholly win over his own crew. This week it was revealed that Carney had failed to persuade all of the other members of the BoE’s Monetary Policy Committee [MPC] to back his introduction of a pledge not to raise interest rates until the U.K.’s unemployment number falls – Martin Weale, voted against Carney’s “forward guidance” policy.
Because of this ‘one’ holdout, financial markets will continue to question the validity of the MPC’s decision to stick with its pledge to keep the BoE’s benchmark interest rate at +0.5% until the British unemployment rates falls to +7% (currently +7.8%). Cable is over 8-cents higher than last month's 1.4814 low. Heavy GBP short selling has also aided the sterling’s rise.
Is the GBP’s rally near completion? The mighty dollar will only truly begin to benefit if the Fed starts to taper next month (September 18). Perhaps the August NFP will be the taper dampener? It’s released on September 6, nearly two weeks before the FOMC announcement. GBP option barriers at 1.5650 and 1.5700 have been keeping the currency on the straight and narrow. The Tech analysts believe that this weekly close above the 200-DMA (1.5524) highlights the underlying bullish market structure. Next stop is the option knockouts!