BoE’s Posen Calls for More QE; British Pound Posts Reversal Top

The GBP USD fell sharply on Tuesday, triggered by negativecomments from Bank of England’s Adam Posen regarding more quantitative easing.Posen said that more QE is going to be needed in order to lead the UKeconomy to full recovery. Posen suggested that further fiscal stimulus andcorporate debt buying might be needed if this round of QE is not enough.

The GBP USD fell sharply on Tuesday, triggered by negativecomments from Bank of England’s Adam Posen regarding more quantitative easing.Posen said that more QE is going to be needed in order to lead the UKeconomy to full recovery. Posen suggested that further fiscal stimulus andcorporate debt buying might be needed if this round of QE is not enough.

Despite recent news to the contrary regarding better thanexpected GDP and high inflation, Posen believes that the UK economy may fall into a cycle oflow growth for a long period of time although he dismissed predictions of adouble-dip recession. The type of scenario he is forecasting is usually markedby high unemployment and low growth.

Technically, the British Pound fell after Posen’s speech,triggering a hard sell-off and lower close. The closing price reversalformation is indicative of a top. This pattern often leads to the start of atwo to three day break highlighted by a 50% retracement of the last rally.

Based on the last rally of 1.5503 to 1.5894, the retracementzone is 1.5698 to 1.5652. An uptrending Gann angle is at 1.5616.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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