GBP/USD Price Analysis: Defending critical daily support line ahead of BOE
- GBP/USD bounces off key support just above 1.3600.
- BOE may hint at tapering, follow Fed’s footsteps.
- Will the rebound sustain on the BOE rate decision?
GBP/USD is bouncing off pivotal support just above the 1.3600 level, as the US dollar keeps shedding ground amid an improvement in the risk sentiment.
The bulls are attempting the last dance amid expectations that the Bank of England (BOE) may hint at a potential taper timing, especially after the Fed’s hawkish stance and rising UK inflation expectations. Strengthening the UK labor market also backs the case for the BOE to signal monetary policy normalization.
Heading into the BOE showdown, GBP/USD is attempting a bounce from the horizontal trendline support on the daily chart at 1.3611.
The 14-day Relative Strength Index (RSI) has recovered from lower levels, adding credence to the rebound in the cable. However, the leading indicator stays within the bearish territory, keeping GBP sellers hopeful.
A breach of the abovementioned support could trigger a fresh downswing towards 1.3550, the psychological barrier. The next relevant downside target is seen at 1.3500.
GBP/USD: Daily chart
Alternatively, the GBP bulls need to find acceptance above the range highs around 1.3690 to create any meaningful recovery.
The next bullish target is envisioned at the 1.3750 figure, above which the 21-Daily Moving Average (DMA) at 1.3769 could be put to test.
GBP/USD: Additional levels to consider
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
