The GBP/USD pair held quite steady in a low-volume environment as traders reflected on the hawkish statement by Huw Pill. The pair jumped to a high of 1.2566, the highest point since September 5th. It has surged by over 4.45% from the lowest point in October.
Hawkish statement by Huw PillThe forex market was relatively muted on Friday as most traders remained in the sidelines during the Thanksgiving weekend. There was also no major economic economic data from the United States and the UK on Friday.
The only data came from Gfk, which published a strong consumer confidence reading from the UK. Confidence improved to minus 24 in November from the previous month’s minus 30. This report was better than the median estimate of -28.
Consumer confidence is a notable figure because spending is an important part of the economy. The report came a day after S&P Global published encouraging flash manufacturing and services PMI figures.
The manufacturing PMI rose to 46.7 while the services and composite PMIs rose to 50.5 and 50.1, respectively. These numbers were better than what analysts were expecting. They are a sign that the economic downturn is bottoming.
These figures came out a day after Jeremy Hunt delivered his autumn statement that had several tax cuts. The government is attempting to boost the economy ahead of next year’s general election.
The GBP/USD pair also jumped as traders reacted to an FT interview with Hugh Pill, the Bank of England’s Chief Economist. He reiterated that the battle against inflation was still on and that the bank won’t relent until it moves to the 2.0% target. He said:
“When I look at the prints of those indicators through the last few months, I see more evidence of sort of stubborn, high-level rates of inflation or growth that are stronger than we would really see as compatible with price stability.”
GBP/USD technical analysis
The GBP to USD pair has staged a strong recovery in the past few weeks. Along the way, it has moved above the 50-day and 100-day Exponential Moving Averages (EMA). The two are about to form a bullish crossover pattern.
The GBP/USD pair has also risen above the Ichimoku cloud indicator while the MACD and the Relative Strength Index (RSI) have continued the bullish momentum. Therefore, the outlook for sterling is still bullish, with the next reference point being at 1.2840.
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