- Cable bulls lick their wounds in post-BOE aftermath.
- Carney’s concerns on the economy and forecasts downgrade weigh on the GBP.
- Trade optimism-led dollar strength to persist ahead of US data.
The recovery attempts in GBP/USD continue to face stiff resistance near 1.2825 region, leaving the spot in a downside consolidation phase above the 1.28 handle, as the dust settles over the dovish Bank of England (BOE) monetary policy decision aftermath.
BOE’s dovish twist pounds the British pound
The main catalyst behind the Cable downward spiral a day before was the dovish twist seen in the BOE’s monetary policy announcement. The rates hit the lowest levels since September 24th at 1.2793 after the BOE MPC maintained the interest rates, however, two MPC members voted for a rate cut.
The cautious remarks from the BOE Governor Carney also exacerbated the pain in the pound. “Governor Carney, in his later speech, flagged the risks of a global economic downturn and warned that a no-deal Brexit would likely result in job losses and business closures”, FXStreet’s Chief Analyst, Valeria Bednarik, noted.
Meanwhile, the US-China trade deal hopes backed risk-on market profile sparked a massive rally in the Treasury yields, which in turn drove the US dollar broadly higher. Therefore, the Cable also was pressured by the rise in generalized demand for the greenback.
The focus will remain on the trade-related developments and USD dynamics amid a data-empty UK docket while the UK political headlines take a back seat, with rising dovish BOE expectations. Also, of note remains the UK Preliminary Michigan Consumer Sentiment data, due at 1500 GMT, for fresh dollar trades.
GBP/USD Technical levels to consider
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