GBP/USD sticking to the 1.31 level as the BoE's UK rate hike decision looms

It's BoE 'super Thursday', and markets are awaiting an interest rate hike for the UK.
Outside of today's central bank action, a lack of movement on Brexit hangs over the GBP/USD.

Joshua Gibson FXStreet

The GBP/USD is trading into the 1.3100 technical level, twisting to the bearish side in early Thursday trading but remaining well within the week's tightening range as Pound traders buckle down for the Bank of England (BoE) rate call due today.

Thursday brings the latest Monetary Policy Statement from the BoE as well as the central bank's interest rate call, all dropping at 11:00 GMT; a 25 bps rate hike from the BoE has been highly anticipated, but a recent slump in UK economic data has left the odds of a rate hike on the low side, and yesterday's Markit PMI dropped to 54.0, below the market's broader expectations and slipping further away from the previous reading, implying a slowdown for the UK could be on the cards for England's domestic economy.

Brexit concerns also remain close to the surface, with trade talks between the EU and the UK continuing to make little progress, despite the official deadline of March 2019 fast approaching and no final deal in sight. Talks are set to resume in mid-August with Prime Minister Theresa May at the helm, taking over Brexit negotiations personally.

GBP/USD Levels to watch

All eyes are on the BoE for Thursday as broader markets await the will-they-or-won't-they answer to the UK's anticipated rate hike, but as FXStreet's own Valeria Bednarik noted, even a rate hike does materialize and drive the GBP higher on the day, downside remains wide open for Brexit tensions to keep the bearish pressure up: "Pound gains could be short-lived, ahead of a clearer picture on Brexit. From a technical point of view, the pair retains its neutral stance in the short term, as in the 4 hours chart, it remains stuck to a directionless 20 SMA, while technical indicators continue pivoting directionless around their midlines."

Support levels: 1.3090 1.3045 1.3010

Resistance levels: 1.3150 1.3190 1.3230

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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