GBP/USD is currently consolidation of the downside from the Brexit fall-out the reached ows of 1.2977 before recovering back to 1.3477 and 1.3088 and wide range.
GBP/USD is now making a equilibrium here and sentiment and data from mainland Europe, the UK and across the Atlantic will now determine subsequent levels. The UK economy has already started to show signs of contraction following the UK's public vote to leave the European economy with PMI's and retail sales missing expectations but quite some margin. The BoE however has held off from jumping the gun so far , but the MPC sent out a strong signal that additional easing is likely to be announced in August.
Analysts at ING explained, "Chief Economist Andy Haldane recently said that a ‘package’ of measures will need to be delivered ‘promptly as well as muscularly’. In this note, we argue that limited scope for aggressive Bank rate cuts means that the resumption of QE next month is necessary to offset the Brexit uncertainty shock. While markets have all but priced in a 25bp rate cut, we think a £50bn QE announcement in August would drive gilt yields and GBP lower."
GBP/USD levels
Analysts at Commerzbank explained, "The intraday Elliott wave count suggests that the market is not ready to go sub 1.30 yet, failure here is needed to trigger a slide to 1.2885/1.2750. Support at 1.2750/78.6% retracement of the move from 1985 to 2007 is regarded as the last defense for the 1.0463 1985 low."
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