“¢ The USD struggles to add to the post-FOMC recovery and helps regain traction.
“¢ The British Pound further supported by optimism over UK cross-party Brexit talks.
“¢ Traders seemed reluctant to place aggressive bets ahead of BoE’s Super Thursday.
The GBP/USD pair quickly retreated around 30-pips from session tops and is currently placed at the lower end of its daily trading range, around mid-1.3000s.
The pair failed to capitalize on its early European session positive move supported by recent reports that the UK PM Theresa May is willing to compromise on a customs union, to get closer to a deal with Labour, and better than expected UK construction PMI.
Meanwhile, the US Dollar struggled to build on the overnight attempted bounce, triggered by not so dovish FOMC statement, and held on the defensive, which provided an additional boost and remained supportive of the pair’s intraday positive move.
The uptick, however, lacked any strong conviction as traders now seemed reluctant to place any aggressive bets ahead of the BoE’s Super Thursday, expected to leave interest rates/asset purchase target unchanged at 0.75% and £435 billion respectively.
Hence, the key focus will be on the quarterly inflation report (QIR), which will be followed by the BoE Governor Mark Carney’s post-meeting press conference and might infuse a fresh bout of volatility around GBP crosses.
As Yohay Elam, FXStreet’s own Analyst explains: “The BOE may stick to its forecasts and claim it is unable to make any political assumptions. If the recent drops in prices are seen as temporary, the BOE may stick to its guns and continue saying it wants to raise rates. In this case, GBP/USD has room to rise.”
Technical levels to watch
Heading into the key event risk, Yohay Elam also offers important technical levels to watch for: “The round number of 1.3100 was the top point on Thursday and serves as initial resistance. It is followed by 1.3140 that held it down in mid-April and by 1.3200 that was a high point in early April.”
“Support awaits at 1.3020 that capped an upwards move in late April. 1.2960 was the low point in March and separates ranges. 1.2920 held the pair down late last week, and 1.2870 is the lowest point in the past two months,” he added further.
Share
