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  • GBP/USD recovery attempt from 1.2185 low, capped below 1.2240/50.
  • The pound remains vulnerable in concerns about Brexit and BoE interest rates.
  • The pair is testing the upper limit of the near-term downward trending channel.

Sterling’s reversal from 1.2300 highs on Tuesday found support at 1.2185 earlier on Thursday although the ensuing recovery attempt remains capped halfway through Wednesday’s pullback, at 1.2240/50 resistance area.

Pound vulnerable on Brexit woes and BoE

The GBP/USD seems unable to take advantage of the recent dollar weakness. to stage a solid recovery. The investors are increasingly anxious about the pound on the lack of progress on the trade talks with the EU, which are boosting the chances of a no-deal Brexit. In the current context, of coronavirus shutdown, the consequences of an unfriendly exit from the Union might have a severe impact on the UK economy.

Against this backdrop, BoE Governor Andrew Bailey recognized on Wednesday that the Bank is considering introducing negative interest rates for the first time in more than 300 years of history. These comments have increased negative pressure on the GBP.

GBP/USD capped below trendline resistance

Four-hour charts show the GBP/USD pushing against downtrend trending resistance from April 30 highs, now at 1.2240/50, which is also a previous support level April 21, May 7 lows). The pair should break above there to increase bullish momentum, and aim towards the 1.2300 area (April 30 high) and then 1.2340 (May 13 high)

 

GBP/USD key levels to watch