December British Pound Daily Chart with Swing Chart Indicator
Despite talk that the Bank of England will restart its bond-purchase program to help boost the Economy, the December British Pound is trading higher overnight.
Shortly before the release of this morning’s BoE monetary policy statement traders seem to be squaring up positions amid speculation the central bank will leave its key interest rate unchanged at 0.5 percent The wildcard this morning is whether the BoE will revive its quantitative easing program with at least a 50 billion-bound injection of fresh funds.
If this morning’s strength isn’t position squaring, then it is possible that sentiment is shifting toward the BoE not providing the stimulus that speculators are counting on. If traders are backing away from a stimulus move then look for a little strength in the British Pound, but don’t expect it to last too long. With the U.K. economy slowing, look for speculation to increase shortly that the BoE will be ready to provide stimulus at its November meeting. The economy is too weak for the central bank not to provide stimulus over the near-term. At this time it’s not a matter of if, but when.
Technically, the December British Pound is in a downtrend. The main trend will turn up on a move through the last swing top at 1.5706. A breakout through this level will also confirm the double-bottom that is currently forming at 1.5316 and 1.5330. A failure to hold these two bottoms could trigger an acceleration to the downside with 1.5296 the first target.
