Pound Trades High

Starting today’s report with an important quote: “The U.S. Federal Reserve must be careful not to remove its monetary stimulus too quickly because of potential weakness in the labor market and risks of foreign economic downturns, Fed Governor Lael Brainard said yesterday”.

The greenback was negatively affected by such remarks and dropped against major currencies. The U.S. dollar lost 20 pips during yesterday’s trading session and settled at 95.

The Pound settled above $1.33 yesterday, The Bank of England said it would buy as much as 10 billion pounds ($13.3 billion) worth of sterling corporate bonds via reverse auctions on September 27, as it seeks to bolster Britain’s economy.

The BoE said it scheduled to hold three auctions a week initially, and would spread its purchases over 18 months. Technically, the pound could continue its gains and touch $1.34 during the course of the day.  

Euro settled vs. USD at $1.1230, on rising US interest rate hike expectations. From a technical point of view, fiber could trade flat during the course of the week in anticipation of the Fed meeting report, which will be released this month.

Gold failed to settle above $1,330 and ended yesterday’s trading session below key resistance levels. From a technical point of view, the yellow metal could decline further to $1,300.

Oil prices rose yesterday, positively affected by weak USD and strong U.S. equity markets. U.S. crude touched $46 and could hit $46.50 during the course of the day.

The most important economic events:

  • GBP Bank of England Bond-Buying Operation Results: (GMT 15:50) Medium - Forecast (N/A) – Previous (N/A)
  • USD NFIB Small Business Optimism (AUG): (GMT 12:00) Medium – Forecast (-$105.5b) – Previous (-$64.4b).
  • USD Monthly Budget Statement (AUG): (GMT 15:50) Medium – Forecast (94.8) – Previous (94.6).

The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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