Sterling displayed a fairy messy knee-jerk reaction in the immediate aftermath of the BoE's policy decision this month. Putting the momentary whipsaws aside, however, GBP/USD has settled and currently stands little changed from pre-announcement levels. Economists at TD Securities note that cable continues to exhibit all the hallmarks of a range-trade and highlight the key levels to watch.

See – EUR/GBP: Optimistic message from the BoE to cheer the pound – Rabobank

Near-term risk backdrop calls for a still cautious view on GBP/USD

“The MPC simply delivered few surprises to the overall market. As such, the decision to taper asset purchases looks fully priced. As a final component, part of the underwhelming response could be the result of the way in which the move was communicated.”

“We think the FX market will still see this as a policy shift – at least at the margin. Superficially, it is simply the confirmation of the BoE's earlier intent to draw a line under its latest balance sheet expansion. Together with the Norges Bank, the BoC, and – perhaps – the RBA, we now have a subset of DM banks that are moving toward a change of tone, at least to varying degrees. This should help solidify sterling's fundamental footing relative to some of its major trading partners. However, this is likely to play out only over the medium term.”

“A break higher looks path-dependent upon both a softer NFP reading and a pledge by the Scottish pro-independence factions not to pursue an immediate referendum if they achieve the expected majority in the local parliament. That set of outcomes would likely be followed by another test of the recent range highs in the 1.4000/10 zone. A clear break above would naturally target a move toward the late February peak at 1.4237.” 

“We think dip buyers are likely to emerge first around 1.3800, while the double-bottom at 1.3670 should provide fairly robust support at this stage.”

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD: Prints falling wedge around key support line near 1.1800

EUR/USD stays depressed around 1.1800, near the lowest since early April, amid the initial Asian session trading on Tuesday. The currency major pair portrays a bullish chart pattern, falling wedge, after a three-day fall.

EUR/USD News

GBP/USD: Bears cheer coronavirus, Brexit pessimism below 1.3700

GBP/USD teases lows marked in March/April as bears take a breather around 1.3670 amid Tuesday’s Asian session. In doing so, the cable pair justifies the market’s fears over the Delta covid variant as well as Brexit woes.

GBP/USD News

XAU/USD pares early losses, bearish bias stays intact below $1,820

Gold started the new week with a bearish gap. XAU/USD could retest $1,800 as bullish momentum weakens ahead of key resistance levels. Risk aversion is likely to help USD continue to gather strength.

Gold News

Crypto market red, but Simon says BTC may rally to $46,600

BTC continues to outline a falling wedge pattern. ETH building a descending triangle pattern with a 42% measured move. XRP down -20% for the month and triggered a bearish Death Cross pattern.

Read more

Stock market selloff turns into a rout

Selling is all the rage across markets this afternoon, and heavy losses have been seen across stock markets in the US and Europe. Monday picks up where Friday left off. Downside momentum picks up throughout the day.

Read more

Forex MAJORS

Cryptocurrencies

Signatures