MARKETS: Dollar bulls boosted by US Q3 GDP results

Data from the States has pointed towards a recovery in the month of November, and with previous concerns regarding the potential slowdown in economic momentum in the US quelled, sentiment towards the Dollar has become sanguine. Tuesday’s impressive US GDP release has provided the Federal Reserve with another compelling reason to raise US interest rates and bullish investors have received further encouragement to propel the Dollar Index higher back towards the psychological 100 level.
Sterling depreciated across the currency markets as Governor Mark Carney failed to provide a date on when the Bank of England may start raising UK interest rates during his testimony to the Commons treasury committee. Market participants were left empty-handed and acknowledged his inability to give a concise date on when the BoE will take action, as a sign that UK interest rate hike expectations may be pushed back further.
With the Bank of England’s reluctance to raise UK rates clearly visible, any chance Sterling bulls have of bouncing back within the GBPUSD may have been sabotaged. Tuesday actions confirms that last week’s relief rally in the GBPUSD had nothing to do with the improved sentiment towards Sterling and that in fact it simply offered an opportunity for bearish investors to send prices lower.
Technically, the GBPUSD is bearish and the 1.500 support has been breached, which may act as a dynamic resistance that should invite an opportunity for sellers to send prices back down towards 1.5000.
The next major focus for the USD this week will be the latest core durable goods on Wednesday, and any further signs of recovery in the US economy may add to the factors which provide a strong case for the Fed to raise US interest before year end.

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