GBP/USD Forecast: defends 1.32 handle as focus shifts to Thursday’s BoE decision

Haresh Menghani FXStreet

The GBP/USD pair once again found some support ahead of the 1.3200 handle on Friday and jumped back to the 1.3300 neighborhood, albeit lacked any strong follow-through. Reemerging hard Brexit concerns and fading prospects for an eventual BoE rate hike move in the near future did little to provide any additional boost to the British Pound. Traders also shrugged off escalating US-China trade tensions, especially after the US President Donald Trump approved a tariff of 25% on about $50 billion worth of Chinese imports, with persistent US Dollar strength further collaborating towards keeping a lid on any meaningful up-move.

The pair held weaker below the 1.3300 handle at the start of a new trading week as investors now start repositioning for the BoE June monetary policy decision on Thursday. Against the backdrop of steady inflationary pressure, the UK central bank is widely expected to maintain status quo and would make the vote count even more relevant. This coupled with the BoE Governor Mark Carney's scheduled speech late Thursday would further help investors determine the next leg of a directional move for the major.

From a technical perspective, the pair managed to settle just above the 1.3200 handle and hence, it would be prudent to wait for a follow-through weakness before favouring any further near-term downside. A convincing break below the mentioned support is likely to accelerate the fall towards 1.3135 horizontal support before the pair eventually breaks below the 1.3100 handle and aim towards testing its next support near the 1.3075 region.

On the upside, recovery beyond the 1.3300-1.3310 immediate hurdle is likely to confront immediate resistance near mid-1.3300s, above which the pair is likely to make an attempt towards reclaiming the 1.3400 handle. Any subsequent up-move might remain capped near the 1.3425-30 supply zone ahead of this week's key event risk.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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