- Bank of England announces temporary purchase of bonds.
- The pound tumbled after a brief rally.
- GBP/USD falls from the 1.0840 zone to the 1.0530 zone.
Volatility in pound crosses spiked following the Bank of England’s announcement that it will buy long-term bonds. The GBP/USD once traded at 1.0839, only to later plunge to 1.0536marking a new low in two days.
The collapse in the prices of British bonds and in the pound itself, led the Bank of England to announce on Wednesday that it will buy long-term bonds temporarily and to affirm that it will not hesitate to raise the interest rate as necessary to make it inflation returns to the 2% target.
After this, the pound initially reacted upward, but then had a sharp fall. The impact was also felt in the global equity markets that reacted with increases, which have moderated. In turn, US Treasury bond yields fell. The 10-year rate went from being above 4% for the first time in more than a decade to falling to 3.88%. The British benchmark fell from 4.55% to 4.02%, before rising to 4.25%.
GBP/USD is trading around 1.0580, down for the day and eyeing the 1.0450 zone and below already at Monday’s low of 1.0316. A firm return above 1.0900 would relieve negative pressure.
For its part, the EUR/GBP, which fell to 0.8838 after the BoE announcement, is at 0.9030. While the GBP/JPY jumped to 156.65 before falling to 152.50.
The impact of the BoE has shown to be more lasting on stocks than on the British pound so far. Volatility remains high and is expected to continue that way.
Technical levels
GBP/USD
Panorama | |
---|---|
Last Price Today | 1.0573 |
Today’s Daily Change | -0.0159 |
Today’s Daily Change % | -1.48 |
Today’s Daily Opening | 1.0732 |
Trends | |
---|---|
20 Daily SMA | 1.1378 |
50 Daily SMA | 1.1758 |
100 Daily SMA | 1.2013 |
200 Daily SMA | 1.2628 |
levels | |
---|---|
Previous Daily High | 1.0838 |
Previous Daily Minimum | 1.0655 |
Previous Maximum Weekly | 1.1461 |
Previous Weekly Minimum | 1,084 |
Monthly Prior Maximum | 1.2294 |
Previous Monthly Minimum | 1.1599 |
Daily Fibonacci 38.2% | 1.0768 |
Daily Fibonacci 61.8% | 1.0725 |
Daily Pivot Point S1 | 1.0645 |
Daily Pivot Point S2 | 1.0559 |
Daily Pivot Point S3 | 1.0462 |
Daily Pivot Point R1 | 1.0829 |
Daily Pivot Point R2 | 1.0925 |
Daily Pivot Point R3 | 1.1012 |
Source: Fx Street
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