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  • GBP/USD failed to capitalize on the post-BoE move up to levels beyond the 1.2400 mark.
  • Dovish BoE outlook, coronavirus crisis kept a lid on any meaningful upside for the major.
  • A modest pickup in the USD demand further contributed to the pair’s intraday pullback.

The GBP/USD pair had some good two-way price moves on Thursday and has now slipped back towards the lower end of its daily trading range, around the 1.2330 region.

The pair reversed an early Asian session dip to near two-week lows and staged a goodish intraday bounce from the 1.2300 neighbourhood after the Bank of England (BoE) announced its monetary policy decision.

As was widely expected, the BoE held rates steady and announced no further stimulus. The UK central bank also showed readiness to take fresh action to counter the economic fallout from the coronavirus pandemic.

The British pound got a minor boost in the absence of any fresh quantitative easing measures and lifted the pair back above the 1.2400 mark, albeit the momentum fizzled out rather quickly near the 1.2420 region.

The pair started retreating after the BoE Governor Andrew Bailey indicated an extension of the quantitative easing – perhaps as early as in June. This coupled with a dovish outlook further weighed on the pound.

This comes on the back of the fact that the UK has been slower than other European countries to announce plans to ease lockdown measures and re-open its economy, which, in turn, further took its toll on the sterling.

Apart from this, a modest pickup in the US dollar demand, despite a fresh leg down in the US Treasury bond yields, further contributed to the pair’s intraday pullback of around 75-80 pips from the post-BoE swing highs.

Meanwhile, data released this Thursday showed 3.169 million Americans applied for unemployment-related benefits during the week ending May 2nd. The reading was worse than 3 million anticipated, albeit did little to provide any impetus.

It will now be interesting to see if the pair continues to find some support at lower levels or finally breaks below the 1.2300 mark to confirm a bearish double-top formation near the very important 200-day SMA.

Technical levels to watch