GBP/USD – Pound Gains Ground as BoE Stays on Sidelines

GBP/USD is on the move on Friday. The pair is trading at 1.3138, up 0.40% on the day.

Cable Rises as BoE Maintains Rates

Mark Carney’s final meeting as Governor of the Bank of England was dramatic, as analysts were split over whether the BoE would lower the benchmark rate on Thursday. There was a 45% likelihood that the bank would trim rates to 0.50%, but in the end, policymakers opted stayed on the sidelines. The vote to maintain rates at 0.75% was 7-2, compared to the 6-3 vote last month. This was a surprise, as many analysts and investors had expected a closer vote or even a rate cut. In the end, the BoE was of the opinion that global growth was improving. At the same time, Carney noted that “although the global economy looks to be recovering, caution is warranted”. Investors gave a thumbs-up to the pound after the decision not to cut rates, and GBP/USD has gained close to 1 percent since the BoE announcement.

Technical Analysis

The pair has moved sharply higher and broken through some resistance barriers along the way. 1.3100 has switched to a support role and could see more action on Friday. Below, there is support at 1.3050. Next, the 50-EMA line is at 1.3026. On the upside,  there is weak resistance at 1.3165, followed by resistance at 1.3200.

Pacific Currencies – Daily Summary

USD/CNY

USD/CNY has drifted all week, as Chinese banks were closed for an extended holiday. Currently, the pair is trading at 6.9314, down 0.07% on the day. There were some key releases earlier on Friday, but the yuan shrugged them off. Manufacturing PMI ticked lower to 50.0, down from 50.2 points. This is indicative of stagnation in the manufacturing sector. The estimate stood at 50.1 points. The services industry is in better shape, with the Services PMI in expansion territory. The index improved to 54.1, up from 53.5 points. This beat the forecast of 53.1 points.

AUD/USD

AUD/USD has posted slight gains on Friday. The pair is currently trading at 0.6712, down 0.10% on the day. The pair lost more ground on Thursday and is down 1.6% on the week, as the coronavirus has dampened risk appetite. PPI ticked lower to 0.3% in Q4, compared to 0.4% in Q3. Although this matched the forecast, this was the lowest reading since Q2 of 2018. Also, Private Sector Credit ticked higher to 0.2%, up from 0.1%. This matched the estimate.

 NZD/USD

NZD/USD continues to lose ground, as the China virus has hurt risk currencies like the New Zealand dollar. The pair dipped below the 0.6500 line on Thursday, marking a 2-month low. Currently, the pair is trading at 0.6478, down 0.08% on the day. There are no New Zealand economic releases on the schedule.