Search ForexCrunch
  • Dovish comments by BoE’s Saunders prompted some aggressive selling in the last hour.
  • BoE Saunders: Next move “quite plausible” be a cut even if no-deal Brexit is avoided.
  • Stronger USD/break below 1.2300 handle aggravates the intraday bearish pressure.

The GBP/USD pair finally broke down of its Asian session consolidation phased and tumbled below the 1.2300 handle to near three-week lows during the early European session.
 
The latest leg of a sudden drop of around 60 pips over the past hour or so came after dovish comments by the Bank of England (BoE) policymaker Michael Saunders, who clearly hinted towards the likelihood of a rate cut amid a high level of Brexit-related uncertainties.

Saunders’ remarks dent the already weaker sentiment

Saunders said that Brexit uncertainties are akin to a “slow puncture” for the UK economy and risks to the global economy are tilted towards further disappointment. He further added that BoE’s next move could quite plausibly be a rate cut even if no-deal Brexit is avoided.
 
The remarks further dented the already weaker sentiment surrounding the British Pound and contributed to the pair’s offered tone for the third consecutive session on Friday, also marking its fifth day of a negative move in the previous six, dragging it farther from two-month tops set earlier this month.
 
Adding to this, the prevalent bullish sentiment surrounding the US Dollar, further supported by a modest pickup in the US Treasury bond yields, and possibilities of some short-term trading stops being triggered below the 1.2300 handle further aggravated the bearish pressure.
 
It will now be interesting to see if the pair is able to find any support at lower levels or continues with its bearish trajectory as the focus remains on any fresh Brexit-related headlines coming out of a meeting between the Brexit Secretary Steve Barclay and the EU’s chief Brexit negotiator Michel Barnier.

Technical levels to watch