GBP and Interest Rates: Levels, Ranges, Targets

GBP/USD ranged for the week 185 pips from 1.3042 to 1.2857 or barely 2% in total. FOMC, GBP/USD ranged 69 pips from 1.2998 to 1.2929. For the week, 185 pips factors to 37 pips per day. UK and all nations’ money markets are volatile and active. The UK for example ranges roughly 30 points per day or 150 actively traded points for the week. GBP/USD gained barely 35 pips above the UK money market range.
The problem inside all nations’ money markets is interest rate traders are practically trading the same old rates and ranges day in and day out. The daily changes to interest rates are slight. Interest rate traders by their actions are doing quite well but at the expense to advance interest rate causes and ranges as well as exchange rates. To ask the question will the BOE raise answers by why should the BOE raise when the system is functioning. A functional system in todays markets I term the containment policy as the same money sloshes around the same old daily rates.
I termed GBP a starnge currency pair when in reality GBP is a normal currency pair but its the interest rate traders responsible for containment of GBP. On Wednesday, FOMC, interest rate traders knew exactly GBP’s destination upon the FOMC announcement. How they knew is by the triggers that move exchange rates as every nation has its own distinct trigger. The trap nation and least understood in my estimation is USD because many triggers exist. Nation’s established their own interest rate system based on USD but against unique features to triggers, rates and ranges. So what is GBP but USD in another form. More later.

EUR/USD today’s vital points. 1.1123 V 1.1275.
GBP/USD. 1.2833 and 1.2872 Vs 1.2889 and 1.2928. Watch 1,2940 as this is the range point.
GBP/JPY. 143.04 and 143.48 Vs 144.09 and 144.53.

 

Brian Twomey

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