Follow US Investment Immigration and US Economic updates: The GBP/USD continued its volatile rebound pattern in the Asian market on Tuesday (November 5), trading around the 1.5980 level. Bank of America is optimistic about the US dollar's performance in 2014.
The US Dollar Index previously fell to a low of 79.00, the lowest since February, but this attracted a large number of fund managers to buy, with purchase volumes reaching a five-year high. Dollar bulls are confident in the US economy.
Bank of America Corp's retirement fund and institutional investors recorded the highest dollar purchases at the end of October, the highest since January 2009. The main targets for purchases were the US dollar against the British pound and the US dollar against the euro.
Foreign media surveys show that economists expect the US economic growth rate to improve in every quarter of 2014, rising from 2.6% to 3%. Economists also expect the overall volatility of G10 currencies to remain low at 2.2%.
Bank of America Corp and Societe Generale SA believe that strong economic performance may lead to US inflation levels being higher than those of other major countries, prompting the Federal Reserve to reduce bond purchases, which would support the dollar.
David Woo, head of global rates and currencies at Bank of America Corp, stated that fundamentally, the US dollar index will continue to perform strongly. The biggest theme in 2014 will be inflation, particularly the differences in inflation levels among countries. The US will undoubtedly be the first country to shift to tightening policies.
On the trading front, the GBP/USD faces resistance at 1.6000. If this resistance is not broken, downward pressure on the exchange rate will continue.
