Forex: GBP/USD little-changed after Yellen gets Senate nod

on Jan 7, 2014
Updated: Oct 21, 2019

**, Tuesday 7 January:**

As expected, the US Senate voted yesterday to confirm Janet Yellen as the next chair of the US Federal Reserve System. Although markets had taken the confirmation as a given, the GBP/USD initially retreated from its intraweek high of 1.6433, reached yesterday before the positive vote. Those gains against sterling have been given up though in today’s European trading.

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Even though the Polar Vortex sweeping North America prevented 17 senators from getting to Washington DC in time for the session, Yellen’s appointment was comfortably backed by a vote of 56 versus 26. She will formally succeed departing Fed chairman Ben Bernanke on 1 February and chair the central bank’s monetary policy meeting in March.
Said President Obama after the Senate endorsement of his nomination: “With the bipartisan confirmation of Janet Yellen as the next Chair of the Federal Reserve, the American people will have a fierce champion who understands that the ultimate goal of economic and financial policymaking is to improve the lives, jobs and standard of living of American workers and their families.”

Since bouncing from the 89-period Simple Moving Average on the 4-hour chart, the pound has today successfully breached yesterday’s high at 1.6433 to reach 1.6438. The bulls will be looking for a close today above the psychological level of 1.6418, being the 23.6 percent Fibonacci retracement of the uptrend from November, for confirmation that the uptick is not just a false run for stops. Since hitting that high, the pair has eased to be trading at around 1.6424, up 0.07 percent intraday.

In the view of Credit Agricole analysts, “ahead of the key data and events this week, including European Central Bank and Bank of England policy decisions and the US employment report, caution is likely to prevail”.
The US Trade Balance for November is due out at 13.30 UTC today, with expectations for the deficit to have narrowed modestly to $ 40 billion from October’s $40.641 billion. CIBC World Markets economist Andrew Grantham is picking an even greater shrinkage, to $39.5 billion, because average export prices were “broadly flat” during November while import prices fell.


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