GBP/USD analysis: break below 1.30 could unleash another round of panic selling

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3021

BOE hike rates but no more action expected in the foreseeable future amid Brexit risk.
Governor Mark Carney anticipates one rate rise a year for the next few years.

The Pound collapsed against all of its major rivals, with the GBP/USD pair plunging to 1.3015 following BOE's Super Thursday. UK policymakers unanimously voted to hike rates by 25 bps, the first actual hike since the financial crisis. The decision was based on a strong labor market and credit growth. The pair peaked at 1.3120 right after the announcement as it was initially seen as hawkish, but within the press conference, Governor Carney said that Brexit poses a threat, acknowledging that a "cliff-edge" Brexit could affect the bank's plans. In an interview later in the day, Governor Mark Carney said that one rate rise a year for the next few years more or less would get the inflation back to target over the horizon. The UK Markit Construction PMI resulted at 55.8 a solid increase from previous 53.1, although overshadowed by BOE's meeting. This Friday, the UK will see the release of the Markit Services PMI for the same month, expected at 54.7 from the previous 55.1. The next round of Brexit talks will take place in a couple of weeks. Technically, the GBP/USD pair is biased lower, with room to break below the key 1.30 threshold, given that in the 4 hours chart, it is developing well below a bearish 20 SMA, while the Momentum indicator heads firmly lower within negative territory, as the RSI tries to stabilize around 29.

Support levels: 1.3010 1.2970 1.2925

Resistance levels: 1.3045 1.3085 1.3120

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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