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GBP/USD Forecast 10 July 2014

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GBP/USD chart 10 July 2014
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British pound is under pressure

In the morning GBP/USD slightly reacted to the unexpectedly sharp decline in housing prices in Halifax study (-0.6% vs. -0.3%), having descended to a minimum of 1.7105. The fact that many bulls are considering housing market as a factor that will accelerate the transition of the Bank of England into tightening mode, if prices start to fall, and the regulator should not rush anything. Later in the evening, the pair has supported from the U.S. report – on release it has grown to daily maximum at 1.7160.

Tomorrow the Bank of England will hold a regular meeting on monetary policy, and it is likely that once again we do not get anything new from the regulator. The fact that interest rates will be left in the same place is not under doubt, but it will be interesting proportion of votes within the MPC.

GBP/USD has broken the resistance at 1.7125, and then pushed away from it after the publication of minutes of the last Fed meeting. Such a behavior of the pound gives a good chance of continued growth for this currency pair tomorrow, which will also depend on the accompanying statement regarding the Bank of England probable interest rates rising.

After the publication of accompanying statement, the continuation of GBP/USD seems logical. Possible target for this pair is the maximum of 1.7180 which was achieved in June. Buying Call options with end of the day expiry at 1.7150 level looks appropriate.

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