GBP/USD finds support at 1.1020 and approaches 1.1100 session high

The pound is trying to resume the upside trend shown during Wednesday’s Asian and early European sessions. The pair has found buyers at the 1.1020 area on its reversal from 1.1100, to return towards 1.1080 so far.

Mixed signals about BoE’s bond purchases

A Financial Times report suggested earlier on Wednesday that the Bank of England would have signaled private lenders that it would be prepared to extend bond purchases. This has eased concerns triggered by Governor Bailey, who pointed out next Friday as the deadline for the emergency program and urged.

This news and additional rumors suggesting that the British Government could be contemplating a U-turn on the mini-Budget that rattled financial markets have eased negative pressure on the sterling. The GBP/USD has bounced about 1.3% higher on the day, to regain some of the ground lost on Tuesday.

In the macroeconomic domain, the UK economy shrunk by 0.3% in the three months prior to September, according to the NIESR GDP Estimate. This is a larger contraction than the 0.1% forecasted by the analysts and confirms the Bank of England’s recession forecasts.

 GBP/USD should break above 1.11 to gain traction – Scotiabank

FX analysts at Scotiabank point out 1.11 as a key level to improve GBP’s prospects:  “The slowing in the pace of the sell-off from the early Oct high around 1.15 suggests that some bargain hunting is developing around 1.1000/50. Short-term resistance is firm in the 1.1085/95 zone, however, and the pound still has a lot of work to do in order to stabilize (…) Look for cable to turn better bid above 1.11 but trade better offered again below 1.10 in the short-run.”

Technical levels to watch