- The post-BoE uptick fizzled out rather quickly amid a strong pickup in the USD demand.
- The risk-off mood benefitted the safe-haven greenback amid fresh coronavirus jitters.
- A sustained break below 1.2500 mark further aggravated the intraday bearish pressure.
The GBP/USD pair failed to capitalize on the post-BoE spike to mid-1.2500s, instead witnessed some aggressive selling and dived to 2-1/2-week lows in the last hour.
The British pound gained some intraday traction after the Bank of England, as was widely expected, left interest rates unchanged at 0.10% and increased the size of its quantitative easing program by £100 billion. This coupled with the fact that there was no mention of negative rates in the discussions provided a modest intraday lift to the GBP/USD pair.
As investors looked past the BoE decision, the uptick quickly ran out of the steam amid resurgent US dollar demand. Investors remain concerned over a new wave of coronavirus infections and geopolitical tensions in Asia. This, in turn, took its toll on the global risk sentiment and boosted the greenback’s safe-haven status, which exerted some heavy pressure on the GBP/USD pair.
The greenback maintained its mildly positive tone following the release of mixed US economic data. According to the US Department of Labor (DOL), 1.508 million American applied for unemployment-related benefits during the week ended June 13 as against 1.3 million expected. Separately, the Philly Fed Manufacturing Index jumped to 27.5 for June as against consensus estimates pointing to a rebound to -23 from -43.1 recorded in the previous month.
The pair reaffirmed an intraday break below a one-month-old ascending trend-line support near the key 1.2500 psychological mark. Hence, the steep decline witnessed over the past hour or so could further be attributed to some technical selling. Hence, some follow-through weakness towards the 1.2400 round-figure mark, en-route the next major support near mid-1.2300s, now looks a distinct possibility.
Technical levels to watch
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