GBP/USD moves back to flat despite talk of negative interest rates from the BoE
|- GBP/USD has moved back to flat after trading as much as -0.84% on Thursday.
- The price has been very volatile all session with lots of data highlights.
The Bank of England send sterling lower
Monetary policymakers in the UK sent the pound into free fall earlier in the session on Thursday after the bank said they had briefed staff over negative rates. They would not be the first as the ECB, SNB and BoJ have all used the tool in the past with the SNB and BoJ still in negative territory. The BoE kept their stimulus program on hold for now and highlighted the uncertainty the COVID-19 pandemic is bringing on the economy. They did however say that the economy has performed better than expected.
The US data today has not been great as U.S. jobless claims remained elevated pretty high at 860,000. Adding to this, both housing starts and the Philadelphia Fed business index fell. This could be the reason that some of those losses in the pare had been pared. Tomorrow the market will get the latest UK retail sales data and it is expected to fall from 3.6% to 0.07%. This could be slightly harsh are not many more lockdowns have been put in place and many holidays had been cancelled so more people stayed in the UK in August. Although, Job uncertainty could be taking its toll.
GBP/USD 30-minute chart
GBP/USD has now pretty much retaken all of the ground lost after the policy statement release. The price was as low as 1.2864 at one point and now is settling at 1.2919 but importantly remains below the 1.30 resistance.
Looking closer at the chart, the price bounced nicely off the red support level just above 1.2860 which had been used twice before. After also piercing the trendline, the price then went back on to recover to the current level. On the last 30-minute candle it seems like a bank of sell-orders were waiting at 1.30 because the price shot down at the psychological resistance. Now if the bulls are to have any chance of gaining momentum the high of 1.3007 need to be taken out. On the downside the blue support at 1.2918 looks pretty firm. If the bears break that level then a run on levels lower down could be on the cards. This would mean the downtrend on the 4-hour timeframe could continue over the medium term.
-637359683694145384.png){kind=link}
Additional levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.