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Should We Now Expect a Rebound in GBPUSD?

GBPUSD today extended losses after the mixed U.K data. The selling pressure also came from the Opinion Poll published in Sunday Times which showed that the Scottish pro-independence voters were in majority for the first time since the referendum campaign began. Therefore the uncertainty over what currency shall Scotland adopt created pressure on Pound. Other official data showed that the U.K. manufacturing production rose .3% in July in line with the economist’s expectation.

BOE Governor Mark Carney’s hawkish statement however provided some support to Pound. He said that the U.K.’s economic recovery has exceeded all expectations and momentum. Most of the investors are expecting the BOE to raise its benchmark interest rate from a 320 year low of .5% in the first quarter of 2015. The rate at which wages rise continue to be the key decision factor for the timing of the first move.

GBPUSD : Weekly Chart

The pair seems like testing support at 1.6093 or at 100 day SMA on the Weekly chart. Also on the stochastic oscillator the pair is in the oversold zone so we might see some rebound on the pair although demand for US dollar continues to weigh on the pair limiting its gains. Investors are holding dollar in the expectations that Fed will wind up its asset purchase program in October and start raising interest rates by the mid of 2015. If BOE raise interest rate in the beginning of 2015, it will be the first central bank to do that which will again help Pound regain its strength and push it back towards previous highs.