GBP/USD Forecast: BOE disappoints, pound falls

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3890

The Bank of England left its monetary policy unchanged, as expected.
UK policymakers revised growth and inflation forecasts and made minor twists to QE.
GBP/USD is neutral in the near-term, trading between Fibonacci levels.

The GBP/USD pair ends Thursday pretty much unchanged, trading a handful of pips below the 1.3900 figure. The pair seesawed between gains and losses as the Bank of England announced its latest decision on monetary policy. The central bank left the benchmark interest rate unchanged at 0.10% and kept the Asset Purchase Facility steady at £895 billion as widely expected. The BOE also slowed the pace of weekly bond-buying and expects purchases to end around late 2021. Finally, policymakers upwardly revised growth and inflation forecasts, as they now expect the GDP to reach 7.25% in 2021 and 5.75% in 2022 and see 2021 inflation averaging 2.5%.

Investors were looking for clearer signals about tapering and had already priced in upward revisions in forecasts, resulting in a disappointing event in terms of price action. Meanwhile, tensions between the UK and France over fisheries rights continue, with both countries sending navy ships to the Island of Jersey and surrounding areas to monitor the situation. The UK won’t publish relevant macroeconomic data on Friday.

GBP/USD short-term technical outlook

The GBP/USD pair is neutral in the near-term, still meeting sellers around a Fibonacci resistance located at 1.3930. The 4-hour chart shows that the price is hovering around its 20 and 100 SMAs, both aiming higher, although technical indicators remain within neutral levels, lacking clear directional strength. Further declines could be expected on a break below 1.3840, the 50% retracement of the latest daily advance.

Support levels: 1.3880 1.3840 1.3800

Resistance levels: 1.3930 1.3975 1.4010

View Live Chart for the GBP/USD

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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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