GBP/USD extends BoE-inspired rally, jumps to 1.3700 neighbourhood
The pair witnessed a dramatic intraday turnaround and rallied over 125 pips from two-and-half-week lows, around the 1.3565 region after the Bank of England announced its policy decision. As was widely expected, the BoE left the benchmark interest rate and the size of the Asset Purchase Facility unchanged at 0.10% and £895 billion, respectively.
In the accompanying statement, the BoE projected GDP to recover rapidly towards pre-pandemic levels over 2021 and inflation to rise quite sharply towards the 2% target in the spring. Adding to this, the UK central bank pushed back expectations for negative interest rates, which, in turn, prompted some aggressive short-covering around the British pound.
GBP/USD: Near-term focus shifts higher on post-BoE rally
GBP/USD
Cable is stabilizing under session high (1.3697), hit after sharp acceleration higher on BoE’s decision to stay on hold and sideline bets on negative interest rates for coming months.
Relief rally of approx. 1.5 cent significantly reduced mounting downside risk, following Wednesday’s breach of pivotal 20DMA.
This brings larger uptrend (which was paused for a shallow pullback) back on track, however, fresh recovery needs return and close above 20DMA (1.3652) to be verified and to re-focus recent peaks in 1.3750 zone.
Improved daily studies on rising positive momentum and moving averages returning to bullish setup, support the notion
Res: 1.3697; 1.3710; 1.3758; 1.3800
Sup: 1.3623; 1.3604; 1.3565; 1.3519
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