GBP/USD moves due to bad news reporting

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Source: Dukascopy Bank SA


The GBP/USD currency exchange rate made a short term surge above the 1.3920/1.3930 zone. The rate bounced off the 1.3940 level and retreated to the 1.3860 level, which provided support.

The volatility is attributed to the announcement of the Bank of England that it would stick to its monetary policy. Initially, a 30 pip move down occurred, which was followed by a 80 pip recovery.

These moves were created by news agencies reporting that the central bank would slow its government bond buying. However, the official statement clearly stated that the program would remain unchanged. Moreover, some reputable news outlets even started publishing analysis of the future scenarios in case of central banks following the example of the BoE reducing easing.

In regards to the future, on Friday morning the rate appeared to be making another attempt to pass the resistance of the 1.3920/1.3930 zone. If the zone fails to hold, a surge to the 1.3975 level could occur. On the other hand, a potential decline could reach as low as the mentioned 1.3860 mark.
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