GBP/USD to push on as uptrend support at 1.3749 holds – DBS Bank

The Bank of England hosts a policy meeting today, with a likelihood of policy parameters being left unchanged. Cable’s recent decline to 1.3779 off UK-EU tensions is priced in (and unlikely to extend with arbitration in focus), leaving GBP/USD’s uptrend support at 1.3749 untested, which means there is room for the pair to push higher, per DBS Bank.

Key quotes

“There should be a unanimous decision from the Monetary Policy Committee to stay pat on benchmark rates at 0.1% and leave the asset purchase programme unchanged at GBP895 B.”

“The EU has formally filed for legal action, blaming the UK for unilaterally delaying implementing part of the Northern Ireland protocol – in an extreme outcome, the EU can impose trade tariffs. However, this is more likely to be tactical manoeuvres on the part of both parties. This conflict is also unlikely to widen as there is strong US support to maintain the Belfast Agreement, which sets out clear parameters on the governance of Northern Ireland.”

“Unless GBP/USD craters under 1.3749 and extends bearish pressure under the February lows of 1.3567, this remains a market path to advance, even towards the April 2018 highs at 1.4377; and approximating a 50% Fibonacci pull of the decline we saw from July 2014’s 1.7192 peak that accords 1.4302.”