GBP/USD analysis: no BOE rate hikes in the near horizon

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3515

BOE left its monetary policy unchanged, downgrades growth and inflation forecasts.
A weaker dollar prevents the pair from dismantling in the near term.

The GBP/USD pair fell to a fresh 4-month low of 1.3459 on the back of BOE's monetary policy decision and another batch of soft UK data. Industrial Production was up by just 0.1% in March, while Manufacturing Production in the same month fell 0.1%, better than the 0.2% slide expected, but still indicating that economic growth keeps decelerating. Also, the NIESR GDP estimate for the three months to April posted a modest 0.1%, below the 0.3% forecasted. As for the central bank, it left rates unchanged, and offered a dovish stance, as policymakers are concerned about "whether the softness in Q1 might persist." Furthermore, inflation seems to be decelerating at a faster-than-expected pace, as the bank cut inflation and growth projections for this year and the next, reducing the odds for a rate hike in H2 of 2018. Dollar's broad weakness prevented the pair from falling further. Heading into the Asian session, the pair presents a neutral-to-bearish stance for the short-term and according to the 4 hours chart, as it is developing below a flat 20 SMA, while technical indicators have bounced from their daily lows, but remain well below their midlines. The scale leans to the downside for the upcoming sessions, with a break below 1.3445 probably seeing the decline accelerating in spite of dollar's weakness.

Support levels: 1.3480 1.3445 1.3410

Resistance levels: 1.3520 1.3560 1.3600

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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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