GBP/USD Forecast: BOE’s dovish surprise hurt the pound

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3929

The Bank of England hit the pound with an unexpected dovish statement.
As widely anticipated, the BOE left rates and easing programs on hold.
GBP/USD could accelerate its slump on another slide below 1.3900.

The GBP/USD pair fell to 1.3889 despite limited demand for the greenback, as the pound was hit by the Bank of England monetary policy decision. As widely anticipated, policymakers left rates and easing programs on hold. However, the accompanying statement offered a dovish tone, the opposite of the expected hawkish stance.

"The Committee does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably." Market players were looking for a hawkish tilt, including some hints on when tapering may begin. The UK will publish the BOE’s Quarterly Bulletin for Q2 on Friday.

GBP/USD short-term technical outlook

The GBP/USD pair bounced from the mentioned intraday low but ended the day in the red at around 1.3930. In the 4-hour chart, the pair is below a still bullish 20 SMA, while technical indicators hover directionless around their midlines. In the daily chart, the pair is stuck around its 100 SMA for a third consecutive day, somehow hinting at an imminent directional acceleration.

Support levels: 1.3890 1.3850 1.3805

Resistance levels: 1.3965 1.4010 1.4060

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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