GBP/USD ticks lower to 1.2700 mark after BoE lowers Q2 GDP estimate

The GBP/USD pair trimmed a part of its early strong gains to over one-week tops, albeit remained well bid near the 1.2700 handle post-BoE announcement.

The dovish FOMC-led US Dollar selloff helped the pair to build on this week's recovery from multi-month lows near the key 1.2500 psychological mark and continue gaining traction for the third consecutive session on Thursday.

The bullish sentiment seemed rather unaffected by a slight disappointment from the UK monthly retail sales figures for May, with the USD price dynamics turning out to be an exclusive driver of the strong follow-through up-move. 

As James Smith - developed markets economist at ING, points out that a fall in the UK retail sales is clearly down to the weather, where colder temperatures appear to have discouraged people from updating their summer wardrobes.

Meanwhile, the latest BoE monetary policy decision, wherein the UK central bank decided to maintain status-quo turned out to be a non-event for the market did little to provide any meaningful impetus to the British Pound.

The BoE MPC voted unanimously to leave benchmark interest rates unchanged at 0.75% and asset purchase facility at £435 billion, though slightly dovish outlook in the accompanying statement exerted some pressure on the major.

The BoE lowered its estimate of Q2 GDP growth to 0.0% from 0.2% previous and said that the downside risks to growth have increased amid intensifying global trade tensions and the increasing likelihood of a no-deal Brexit.

The downside, however, remained limited and hence, it would be prudent to wait for a strong follow-through selling before positioning for any further intraday slide ahead of the second-tier US economic releases later this Thursday.

Technical levels to watch