The GBP/USD currency pair today traded sideways after a major down slide occasioned by yesterday’s FOMC statement, which outlined a hawkish tone. The release of the public sector borrowing by the Office for National Statistics had minimal impact on the British pound even as the US dollar held on to gains made yesterday.
The GBP/USD currency pair traded in a narrow 45-point range with resistance being established around 1.3515 and support being established at 1.3470.
The British pound benefited greatly from the positive investor sentiment around European equities, which allowed the pair to trade around the 1.3500 handle. Investors largely ignored the release of the UK’s public sector net borrowing, which was released early in the European session. Public sector net borrowing (excluding public sector banks) decreased by £1.3 billion to £5.7 billion in August 2017, compared with August 2016, which is the lowest August net borrowing since 2007.
The US dollar was largely stronger against the British pound after the Hawkish tone outlined by Janet Yellen after the announcement of the FOMC rate decision yesterday. The greenback was stronger against its peers, as tracked by the US Dollar Index, which hit two-week highs yesterday. Investors currently expect another rate hike in December and a commencement of ‘quantitative tightening’ by the Federal Reserve later this year.
The currency pair’s future performance is likely to be affected by the announcement of Theresa May‘s Brexit plan as well as releases from the US docket.
The GBP/USD currency pair was trading at 1.3498 as at 12:44 GMT having rallied from a low of 1.3470. The GBP/JPY currency pair was trading at 151.76 having dropped from a high of 152.23.
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