GBP/USD Analysis: Sustained USD weakness continues to lend support ahead of BoE

• GBP/USD on Wednesday witnessed a dramatic intraday turnaround from over one-week tops.
• Persistent USD selling bias helped limit the downside, rather attracted some dip-buying interest.
• The focus now shifts to the latest BoE monetary policy update and the US initial jobless claims.

The GBP/USD pair had some good two-way price moves on Wednesday and the intraday volatile swings were sponsored by a combination of factors. As investors digested the impact of the UK government's measures to contain the coronavirus pandemic, the pair added to the overnight positive move and gained some positive traction for the second consecutive session amid some follow-through US dollar selling bias. The greenback remained offered in the wake of the Fed's aggressive quantitative easing program. This coupled with the optimism over a massive $2 trillion US stimulus package to avert a financial crisis boosted investors’ confidence and further dented the greenback's perceived safe-haven status against its British counterpart.

The uptick – also marking the pair's third day of a positive move in the previous four – was further supported by mostly in line UK consumer inflation figures for February. From the US, the mixed release of the US Durable Goods Orders report failed to provide any respite to the USD bulls and remained supportive. The pair rallied to over one-week tops but lost steam ahead of the key 1.20 psychological mark and tumbled over 325 pips intraday before catching some fresh bids. The pair quickly reversed a dip to levels below mid-1.1600s and finally settled around 150 pips off daily lows.

The pair now seems to have entered a consolidation phase and was seen oscillating in a narrow trading band around mid-1.1800s through the Asian session on Thursday. Investors seemed reluctant to place any fresh directional bets, rather preferred to wait on the sidelines ahead of the latest BoE monetary policy update, scheduled to be announced later during the European session on Thursday. This will be followed by the release of the highly anticipated US initial weekly jobless claims data, which should influence the USD price dynamics and further contribute towards producing some meaningful trading opportunities.

Short-term technical outlook

From a technical perspective, the 1.1900-20 region now becomes immediate strong resistance, which if cleared decisively, might be seen as a key trigger for bullish traders and set the stage for a move towards reclaiming the key 1.2000 psychological mark. On the flip side, the 1.1760-55 horizontal zone now seems to have emerged as immediate support, below which the pair is likely to slide back below the 1.1700 round-figure mark and test overnight swing lows, near the 1.1640-35 region. Some follow-through selling might turn the pair vulnerable to resume with its prior/well-established bearish trend and pave the way for a fall towards challenging the 1.1500 mark.