Sterling appreciated to a six-week high vs. the euro as the UK jobless rate dropped below the 7% threshold that Bank of England Governor Mark Carney has set as an initial guide for considering increasing interest rates.
Earlier today, the U.S. currency rose against most major currencies as expectations that the Federal Reserve will continue to scale back its stimulus program this week fueled demand for the greenback. What impact did these moves have on major currency pairs?
Against the U.S. dollar the British pound is back to its strongest in almost three years. Against the single European currency unit, which incidentally is more than holding its own vs. the dollar, the pound is back up to its strongest in a year.
Canada is a major producer and exporter of natural resources, which means its currency is closely tied to the fortunes of commodity prices. With signs that the commodity super-cycle is fading, it is likely that CAD will notch up further losses over the course of 2014.
The British pound found some resistance against the dollar recently around the 1.6600 figure, which is where we think the pair will form a top even if just temporary. Our primary count suggests that GBP/USD will fall in impulsive fashion.