GBP/USD Forecast: BOE hit the Pound by hinting more QE
GBP/USD Current price: 1.3331
- The Bank of England’s annual report showed that policymakers are ready to step up QE.
- Governor Bailey sees the need for the BOE to be prepared to "go big and go fast."
- GBP/USD ended the day in the red, but further slides are still unclear.
The Sterling Pound was unable to resist the dollar’s renewed demand, falling as low as 1.3282 to finally settle around 1.3330. Additional pressure came from the BOE as the central bank presented its annual report. Deputy Governor Ramsden said that policymakers could step up the pace of quantitative easing if needed. "We could do it fast if market dysfunction required it." Governor Bailed added that it's very important for the BoE's framework to be robust enough so they can "go big and go fast."
Earlier in the day, the UK published the Nationwide Housing Price Index, which rose 3.7% in August, beating estimates. This Thursday, Markit will publish the final version of the UK Services PMI, foreseen unchanged from the preliminary estimate at 60.1.
GBP/USD short-term technical outlook
The GBP/USD pair has not yet turned bearish, although, in the short-term, the risk of a bearish extension has increased. In the 4-hour chart, the pair has broken below its 20 SMA, which lost bullish strength. Technical indicators have continued to retreat from overbought readings, but are currently struggling to extend their declines into the negative territory, having lost their bearish momentum within neutral levels.
Support levels: 1.3280 1.3235 1.3190
Resistance levels: 1.3370 1.3410 1.3460
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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.
