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  • GBP/USD witnessed some selling in reaction to dovish sounding BoE policy statement.
  • The BoE acknowledged an uncertain growth outlook and the risk of higher unemployment.

The GBP/USD pair came under some fresh selling pressure and slipped below the 1.2900 mark, or fresh daily lows post-BoE announcement.

As was widely expected, the Bank of England left its benchmark interest rates and Asset Purchase Facility unchanged at 0.10% and £745 billion, respectively. In the accompanying policy statement, the UK central bank reiterated the risk of a longer period of elevated unemployment and acknowledged an uncertain growth outlook.

The statement further revealed that the BoE will continue to review a range of possible actions and also discussed the effectiveness of negative interest rates. The dovish sounding statement took its toll on the British pound, which, in turn, was seen as a key factor behind the GBP/USD pair’s sudden fall of around 70-75 pips in the last hour.

On the Brexit front, reports indicated that Britain offered tentative concessions on fisheries in trade talks with the European Union last week. Meanwhile, the European Union’s Brexit negotiator Michel Barnier was out with comments on Thursday, saying that that the UK’s move on fisheries is a glimmer of hope and he still believes that a deal is possible. The developments, however, did little to impress the GBP bulls.

On the other hand, the US dollar struggled to capitalize on its post-FOMC strong recovery move and was seen oscillating in a narrow trading band through the mid-European session. This, in turn, failed to provide any meaningful impetus, with the GBP price dynamics acting as an exclusive driver of the GBP/USD pair’s momentum on Thursday.

Market participants now look forward to the US economic docket, highlighting the release of Philly Fed Manufacturing Index, Initial Weekly Jobless Claims and housing market data – Building Permits and Housing Starts. The data might influence the greenback and produce some short-term trading opportunities later during the early North American session.

Technical levels  to watch