Forex: GBP/USD rally capped circa 1.6050, BoE ahead at 12:00 GMT

Share | (Barcelona) - With the BoE policy meeting ahead at 12:00 GMT, the GBP/USD is pricing in expectations and trading with daily gains today. A noticeable jump was seen recently, mostly due to the successful Spanish debt auction that sent yields down. Spain sold €5.87B, more than the €4-5B targeted: €3.397B of 2-year debt at 2.476% (from 3.282%); €1.950B of 5-year debt at 3.988% (from 4.68%); €470M of 13-year debt at 5.555%. A good way to start the year for Spain, as traders continue guessing when will Prime Minister Rajoy ask for aid through the OMT programme.

The GBP/USD rallied from just above 1.6000 on the London session, finding resistance at 1.6050 (high at 1.6052). TD Securities analysts expect a non-event in the UK as the BoE announces its rates and asset purchases decisions, unanimously expected to remain on hold. "The bigger question for the BoE is what it will do at its Feb meeting; we think that asset purchase will remain unchanged then, but recognize that it could be a close decision, and that a couple of weak datapoints have the potential to change the picture", wrote analyst Alvin Pontoh.

"The market is viewed as having topped out last week - it reversed just ahead of the 1.6452 2009-2013 downtrend and together with the large divergence of both the daily and weekly RSI's, suggests that the market has topped", wrote analyst Karen Jones, expecting rallies to find interim resistance at 1.6135/80 that keeps the immediate downside bias.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Forex and Currencies

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