Bank of England’s Rate Hike Anticipation Makes Pound Bullish

British PoundThe Pound has once again turned weak against Greenback in the middle of September 2017 due to drop in the index of Industrial Order Expectations and deadlock in Brexit talks. The drop in GBP/USD currency pair was further due to proposed tax reform plan in the United States.

The currency pair after dropping to a low figure of 1.3025 regained from its lost ground to trade at 1.3210 levels. We believe the uptrend to continue shortly and the reasons for the same are discussed below.

As per the ONS (UK Office for National Statistics), there is a growth of 94,000 working people between June 2017 to August 2017 as compared to the earlier three months period.

There is a decline of 215,000 unemployed people on a year to year basis. Likewise, there is a decrease of 4.3% in the unemployment rate as on August 2017 as compared to 5% in the earlier quarter. There is a 2.2% increase in average weekly earnings in August as compared to 2.1% increase speculated by the market analysts. In July, there was a growth of 2.1% in the average weekly earnings.

It is interesting to note that the UK Office for National Statistics has reported an annual inflation rate of 3% in September 2017 which is regarded as the highest in past five years. It is likely that the strengthening job market would give rise to a possible rate hike shortly. The Bank of England will hold its next monetary policy meeting on November 2, 2017.

Core Finance

In the United States, there is a steep decrease in building permits as reported by the Census Bureau. There is a decrease of 4.7% in the number of housing starts in September to 1.127 million units from 1.18 million units in August. Analysts are of the opinion that the housing starts will remain the same from August. Correspondingly, there is a sharp decline of 1.22 million units of building permits from 1.27 million units last month and missed the analysts forecast of 1.25 million units.

It is to be noted that home investments have declined by 7.3% which is the lowest in the past seven years. The main reason for the decline in housing starts and building permits is due to natural calamities like Hurricanes Irma and Harvey. The Pound is considered to remain strong against Greenback due to the anticipation of a possible rate hike. The soft economic data has made the Pound temporarily weak at the moment.

GBPUSD Pair Oct 20th 2017

GBPUSD Pair Oct 20th, 2017

As evident from the image above, GBP/USD currency pair as finding support at 1.3150. At the same time, the oscillator is rising towards zero level. We expect the uptrend to continue for some time in future.

In the currency market, traders are advised to open a LONG position in the currency pair GBP/USD near 1.3150 and place stop loss order below 1.3040. If the rally continues as we have anticipated, the LONG position can be sold near 1.3340.

Similarly, in the binary options market, traders should purchase a high or above contract to make money from this uptrend. The strike price of 1.3150 would be ideal for the trade and traders should select expiry date of October 28, 2017.

Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.

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