Sterling Bounces as Fed Sends Mixed Signals


Sterling underperformed last week, declining by nearly 3% against the dollar from week-ago highs but edged higher against the greenback on Monday. The pound has been under the pressure since the September CBI industrial trends survey unexpectedly dropped to a -7 reading, and data showed government borrowing rising more than expected in August. Mixed signals from Fed governors has given the pound a respite.

Kansas City Fed hawk George said again sounded moderate than expected, as she doesn’t think the economy is ready for “normal” policy, but she’s in favor of raising rates gradually, though she warned against losing sight of the potential for a policy mistake from waiting too long to lift rates. George sees inflation firming going forward, so long as oil stabilizes and she supports a move from zero rates, since waiting for perfect conditions for lift-off is not realistic. This is pretty much par for the hawkish course from her, though it just sounds like she’s hedging a bit on global and inflation risks. George is a voter next year.

Sterling bounced near support near a horizontal trend line at 1.5150. Resistance on the currency pair is seen near the 10-day moving average at 1.5365. Momentum on the GBP/USD remains negative as the MACD (moving average convergence divergence) index recently generated a sell signal. This occurs as the spread crosses below the 9-day moving average of the spread.

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Source:: Sterling Bounces as Fed Sends Mixed Signals

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