- GBP/USD has consolidated ahead of the BoE tomorrow, resting around the 21-D SMA.
- GBP/USD is currently trading at 1.2947, down from 1.2979 and up from a fresh low of 1.2924.
GBP/USD has stalled in the daily downtrend from the 24th Jan high at 1.3217 as investors get set for the BoE on Thursday. With keeping Brexit in mind, analysts at Rabobank noted that at the last policy meeting in December the MPC reported that “sterling has depreciated further, and its volatility has risen substantially.
"Few economists are likely to argue with the view that if it were not for political uncertainty the Bank would likely be hiking interest rates again soon, or indeed may have done so already. In December the BoE concluded that “an ongoing tightening of monetary policy over the forecast period, at a gradual pace and to a limited extent, would be appropriate to return inflation sustainably to the 2% target at a conventional horizon”.
The main consensus is, however, is that the BoE will be unlikely to lean one way or the other considering weaker global growth and stronger UK fiscal stimulus with a drop in the price of oil will keep the BoE in check as well.
"The MPC avoids any direct comment on the yield curve, suggesting that they are okay with its current slope, even if above-target inflation forecasts eventually imply quicker hikes,"
analysts at TD Securities argued.
GBP/USD levels
Analysts at Commerzbank explained how GBP/USD has come under pressure and has sold off to the 38.2% retracement at 1.2922:
"The weakness in daily RSI telegraphed this correction lower. There is potential for slippage to 1.2804 the 55 day ma and even 1.2669/62, the August low. Intraday rallies will now find resistance at 1.3033, the 200 day ma and will stay directly offered below here."
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