GBP/USD analysis: BOE's upward momentum offset by dollar's strength

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3910

BOE to raise rates probably sooner and at a faster pace.
UK trade balance industrial and manufacturing production to set the tone Friday.

The Sterling soared against all of its major rivals following BOE's monetary policy meeting, with the GBP/USD pair hitting a daily high of 1.4066, as Carney said that rates probably need to rise sooner and at a faster pace than what the central bank thought three months ago. Furthermore, the central bank upgraded its growth forecast amid the global economic recovery, but also added that inflation is expected to remain close to recent levels, and slightly higher than the projection made in the November's meeting. The market lifted chances of a May hike afterward, despite Carney warned about Brexit uncertainty. The UK will release this Friday Industrial and Manufacturing Production figures for December, alongside with the latest trade balance data. The strong upward momentum seen at the beginning of the day has been offset by dollar's strength, as in the 4 hour chart, the rally stalled around the 50% retracement of the latest daily decline, and is now back below the 23.6% retracement of the same rally, having broken below a bearish 20 SMA, while technical indicators retreat from their mid-lines. The US session low at 1.3890 is now the immediate support, with a break below the level probably favoring a retest of the 1.3830/40 region, where the pair bottomed multiple times this week.

Support levels: 1.3890 1.3860 1.3835

Resistance levels: 1.3960 1.4000 1.4055

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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