Getting That Sinking Feeling
Only yesterday this publication was seen to be reporting on the upward momentum enjoyed by the Pound to US Dollar exchange rate with a 2 month high being achieved; however today has seen a sharp reversals in fortune for the GBP.
Incidentally, the sight of a rising US Dollar fits into the central thesis of the latest exchange rate forecasts issued by Barclays, the exact details of which we published earlier.
GBP breaks through key support levels
The technical outlook for the British Pound to US Dollar exchange rate has also deteriorated for those backing further GBP gains.
According to Emmanuel Ng at OCBC Bank there will be little support ahead of 1.5519:
"The GBP-USD erased intra-day gains 9transient boost from better than expected CBI orders data) post FOMC minutes on Wednesday and has dipped below 1.5650 in early trade on Thursday. Elsewhere, note also dovish comments from the BOE’s Weale, and the GBP-USD may attempt to crack the 1.5600 floor if the broad dollar continues to gain traction. Next support thereafter is expected around the 200-day MA (1.5519)."
Luc Luyet is forecasting a corrective phase from here:
"The breach of the hourly support at 1.5608 could be the early signs of a corrective phase. The resistance at 1.5752 coupled with short-term overbought readings suggest a limited short-term upside potential."
Ipek Ozkardeskaya at SwissQuote says today's Martin Weale comments have only exacerbated the downside pressures on Sterling: 
"In addition to USD-positive FOMC minutes, the sell-off in sterling intensified as BoE’s Waele said more QE may be needed. The comment was clearly not flashy, yet the fact that Mr. Waele is a well-known BoE hawk (and the only hawk who has voted against Mr. Carney’s forward guidance in latest MPC meeting) has been decisive in market reaction.
"After having hit 1.5718 in yesterday’s session, the cable took a dive to 1.5576. With trend and momentum indicators still positive, the downside should remain capped. Bids are seen at 1.5530/50 (Fibonacci 23.6% level on June-July drop & 100-dayMA) area, if supportive, should keep the cable on its uptrend channel and the topside target at 1.5753."
US Dollar Strength is back
Andy Scott, at HiFX gives the back-ground to the latest US Dollar strength:
"The minutes from the Federal Reserve’s meeting this month, so eagerly awaited by the market for clues as to when or by what amount the market committee might decide to reduce the monthly bond purchases provided very little clarity. According to the minutes the majority now seem to be in favour of the idea of tapering the $85bn bond purchases but they were very non-committal on when, deciding instead to keep just about every option on the table for now.
"The majority view is that they will agree a reduction at the next meeting in September providing months payroll numbers aren’t particularly weak.
"They have to be considering the upwards momentum this unprecedented expansion of their balance sheet could eventually have on inflation and they will still be expanding the balance sheet, just not by as much. There will still be a very accommodative monetary policy stance from the Fed to support growth in the world’s largest economy.
"The Dollar snapped back a week-long losing streak against the pound and is up almost 1% having been at a 2-month low just over 1.57 yesterday. It also strengthened against the euro though by less, having been at a 6-month low against the single currency of 1.3450 on Tuesday.
"We would expect the current policy divergence between the US and European central banks (ECB and BoE) to favour a the dollar. However, the recent improvements in economic data from the UK and eurozone should provide some support to both currencies if sustained.”