- Pound drops across the board as Bank of England Governor Carney sounds cautious.
- Cable falls under 1.2600, to the lowest since June 19.
The GBP/USD pair came under pressure over the last hour following a speech from Bank of England Governor Mark Carney that sent the Pound to the downside across the board.
The pair dropped to 1.2583 and as of writing is hovering slightly below 1.2600, down 50 pips for the day, on it way to the second decline in-a-row and the lowest close in two weeks. As the US Dollar continues to recover modestly after falling sharply late in June after the shift in Fed rate expectations, the Pound remains weak, amid UK political uncertainty and the Brexit drama.
The spike lower in the Pound over the last hours was triggered by a speech from BoE Governor Carney. He said monetary policy must address the consequences of the current uncertainty in the UK for the behavior of businesses, households and financial markets. He added that the impact of uncertainty “may warrant a near-term policy response as insurance to maintain the expansion.”
Carney’s comments were seen as dovish by market participants and the pound reacted to the downside, becoming the worst performer of the American session.
Levels to watch
A consolidation below 1.2600 would keep the negative tone intact. The next key support is the 1.2570 area and a break lower would expose 1.2540 that protects the June low at 1.2505.
Technical indicators point to the downside at the moment. The bias will likely continue to favor the US Dollar as long as GBP/USD remains under 1.2655/60. Before that level, resistance could be seen at 1.2605 and 1.2630.
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