GBP/USD outlook remains bearish
In light of the recent sell off in the sterling and the likeliness of the BoE adopting some form of forward guidance in the near-term, Strategist Mansoor Mphi-uddin at UBS assessed “UBS Economics doesn't expect the BoE will start printing money and buying bonds again for now. First, the MPC statement focused on the short end of the curve with its discussion of ‘expected future path of Bank Rate’. Second, the statement has done its job of lowering market expectations of the policy rate, the yield curve more generally and also the currency… But as with the euro, the pound is likely to be weighed down against the dollar throughout 2013 to 2015 by the BoE using forward guidance to anchor interest rate expectations”.
GBP/USD levels to watch
The pair is now advancing 0.13% at 1.4894 and a a breakout of the psychological level at 1.5000 would expose 1.5077 (high Jul.5) and then 1.5172 (MA10d). On the downside, support levels align at 1.4859 (low Jul.8) ahead of 1.4855 (low Jul.5) and finally 1.4832 (2013 low Mar.12). On the flip side,