COZfx: GBP/USD hits fresh 5.5 year highs on Yellen


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COZforex: The pound rise to fresh 5.5 year highs against the US dollar on Tuesday, following dovish comments by Federal Reserve Chairwoman Janet Yellen and as earlier UK data continued to support.

GBP/USD hit 1.7192 amid US morning trade, the pair's highest since October 2008; the pair subsequently consolidated at 1.7156, climbing 0.42%. COZFX strategist Nigel Boynton said, GBP/USD is predicted to find support at 1.7051, and a drop through could take it to the next support line of 1.7023. Meanwhile, the pair is predicted to find its first resistance at 1.7126, and a rise through could take it to the next resistance line of 1.7173.

Ms. Yellen said the US economy is continuing to improve but added that the recovery is not yet complete. She said that considerable slack still remains in the labor market and wage growth remains weak.

The Fed chair reiterated that rates are likely to remain on hold for a considerable period after the bank’s quantitative easing program ends.

Interest rates could rise sooner more quickly if the labor market was to improve more quickly than expected she said, but added that if the economic recovery is disappointing interest rates would remain accommodative.

Yellen's comments came after the Commerce Department reported that U.S. retail sales rose just 0.2% in June, below forecasts for a 0.6% increase. Retail sales for May were revised up to 0.5% from a previously reported 0.3%.

The pound strengthened earlier, after the Office for National Statistics reported that consumer prices rose 1.9% on a year-over-year basis in June, accelerating from 1.5% in May and well above expectations of 1.6%.

The upbeat data added to signs that the economic recovery in the UK is deepening, bolstering expectations that the Bank of England will raise interest rates before the end of the year.

(COZ forex UK)
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