GBP/USD Forecast: Setting up for a fresh bearish breakdown ahead of BoE

The GBP/USD pair seesawed between tepid gains/minor losses and continued with its range-bound price action, around the 1.3100 handle on Wednesday. Investors seemed little affected by the latest Fed monetary policy update, reaffirming the Fed rate hike path, and refrained from placing aggressive bets ahead of the BoE Super Thursday. 

Market participants expect the UK central bank to raise its key lending rate by 25 basis points to 0.75% and had been one of the key factors extending some support to the British Pound. However, risks surrounding Brexit negotiations kept a lid on any meaningful upside and led to a subdued price action over the past two weeks or so. 

The BoE will also release its Quarterly Inflation Report (QIR) with the updated projection for inflation and economic growth over the next 2 years. This coupled with the BoE Governor Mark Carney's comments at the post-meeting press conference guarantees a fresh bout of volatility around the GBP crosses.

Looking at the technical picture, the pair now seems to have formed a bearish head & shoulders chart pattern on the 4-hourly chart, with neckline support near the 1.3095-90 region. A convincing break through the mentioned support would confirm a bearish breakdown and turn the pair vulnerable to slide back towards retesting the key 1.30 psychological mark, nearing the pattern target on the downside.

Alternatively, any meaningful up-move might continue to confront fresh supply near the 1.3150-60 region, above which the pair is likely to aim towards reclaiming the 1.3200 handle. A follow-through buying might now negate any near-term bearish bias and pave the way for an extension of the near-term upward trajectory.