GBP/USD backed into a corner thanks to BoE Carney's smokescreen, 1.40 back on the cards

A thin calendar and growing unease about a BoE rate hike will see the GBP with plenty of challenges for the week ahead.
Q1 prelim GDP figures won't be hitting markets until Friday, giving traders plenty of time to fret.

Joshua Gibson FXStreet

The Sterling is searching for some bids as the new week opens and the GBP/USD finds itself near the bottom after getting pummeled last week, and the pair is trading just north of the 1.4000 major level once again.

GBP/USD last week: data, Carney spook Pound's bulls

The Bank of England's (BoE) Mark Carney turned on Sterling bulls last week when he raised doubts about the potential for a rate hike in May, further dampening buyers' attitudes on top of the bad run of macro data to come out of the UK recently.

GBP/USD Weekly Forecast: Clearance of smoke curtain on the rate hike front supports Sterling

The UK's economy has been softening worse than initially anticipated across the board, and the clock is running out for some positive news to give the BoE a reason to lift rates at their next meeting. This week will be a fairly muted affair for the GBP, until Friday's early session sees UK preliminary GDP figures.

Monday is a quiet read for the Pound, with nothing of note on the calendar, and Sterling traders will be increasingly focused on GDP numbers at the end of the week.

GBP/USD analysis: headed to April's low of 1.3965

GBP/USD Levels to watch

The GBP is set to suffer as markets re-ignite the old argument about just how gradual the BoE intends to be with their gradual rate increases, and the hesitation is on pace to eat away at the Sterling's bullish position on the charts, and as FXStreet's Chief Analyst Valeria Bednarik stated, "technically bearish, the pair has broken below the 61.8% retracement of its early April bullish run and is headed to complete a full retracement to 1.3965. In the daily chart, indicators head south almost vertically after crossing their mid-lines, as the 20 SMA gains downward traction around the mentioned Fibonacci level, reinforcing it as resistance at 1.4120. In the 4 hours chart, the 20 SMA heads sharply lower above the current level, while the pair accelerated south after freaking below its 200 EMA. Technical indicators in the mentioned chart maintain their bearish slopes despite being in oversold levels, in line with additional slides ahead."

Support levels: 1.3965 1.3920 1.3875

Resistance levels: 1.4040 1.4085 1.4120

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

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