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By Kenny Fisher

GBP/USD has shot higher in Wednesday trade, as the pair trades in the high-1.65 range in the North American session. In economic news, the BOE said it may have to raise rates in 2015. It's a quiet day in the US, with no major releases on the schedule.

BOE Governor Mark Carney has done his best to dampen speculation about a rate hike in recent months, but with the UK economy continuing to improve, he was forced to change his stance. On Wednesday, Carney said that the central bank may have to raise interest rates in the second half of 2015 to keep inflation in check. The BOE also sharply revised up its forecast for the next three years, and added that inflation, which has fallen faster than expected, should remain close to the 2% target. The positive news was just the tonic the pound needed, and the currency has responded by jumping about 150 points against the dollar on Wednesday.

Fed chair Janet Yellen, who just started her new job on February 1, didn't generate much excitement in her appearance before Congress on Tuesday. She said that the Fed plans to continue trimming QE, provided that the employment picture continues to improve and inflation rises. She acknowledged that event though the unemployment rate has improved steadily, the recovery in the labor market is far from complete. Meanwhile, JOLTS Job Openings, a key event, showed little change in January, with a reading of 3.99 million. This was short of the estimate of 4.04 million.

GBP/USD for Wednesday, February 12, 2014

Forex Rate Graph 21/1/13

GBP/USD February 12 at 16:25 GMT

GBP/USD 1.6582 H: 1.6587 L: 1.6426

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.6329 1.6416 1.6549 1.6705 1.6896 1.6964

  • GBP/USD has posted strong gains in Wednesday trading. The pound barreled past the 1.65 line in the European session and is within striking distance of the 1.66 line in North American trade.
  • 1.6549 has reverted to a support role as the pound surges higher. This is followed by support at 1.6416.
  • 1.6705 is the next resistance line. There is stronger resistance at 1.6896, which has remained firm since August 2009.
  • Current range: 1.6549 to 1.6705.

Further levels in both directions:

  • Below: 1.6549, 1.6416, 1.6329, 1.6231 and 1.6125
  • Above: 1.6705, 1.6896, 1.6964 and 1.7087

OANDA's Open Positions Ratio

GBP/USD ratio has reversed directions on Wednesday, pointing to gains in short positions. With the pound posting huge gains on the day, numerous long positions have been covered, resulting in a larger percentage of open short positions. A large majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar recovering from its sharp slide.

The pound has jumped about 150 points on Wednesday, following remarks by the BOE about a possible rate hike next year. The dollar remains under pressure in the North American session.

GBP/USD Fundamentals

  • 10:00 British CB Leading Index. Actual -0.1%.
  • 10:30 BOE Inflation Report.
  • 10:30 BOE Governor Mark Carney Speaks.
  • 15:00 US Crude Oil Inventories. Estimate 2.5M. Actual 3.3M.
  • 18:01 US 10-year Bond Auction.
  • 19:00 US Federal Budget Balance. Estimate -16.4B.

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Source: GBP/USD - Pound Surges As BOE Hints At Rate Hike