- Pound still the best performer on Thursday among G10.
- Cable corrects lower as the boost from the BoE to the pound eases.
The GBP/USD peaked slightly below 1.3700 on Thursday, reaching a two-day high after the Bank of England. During the American session, it pulled back amid a stronger US dollar to the 1.3650 area. It still remains in positive territory, far from the highs and with neutral momentum.
BoE rally partially offset by a stronger dollar
The pound jumped in the market after the Bank of England kept its monetary policy unchanged. The BoE signalled no negative rates over the short to medium term and triggered the rally. GBP/USD rose almost a hundred pips. The pound remains the top G10 performer.
During the US session, the US dollar resumed the upside and pushed GBP/USD away from 1.3700. It is hovering around 1.3655, modestly higher for the day and far from the bottom, it hit before the BoE at 1.3565.
“The BoE’s decision provides GBP with some degree of near-term support, but we do not think cable will escape the steady pull of a stronger USD overall. With downside risks building in GBPUSD, we think sterling could still advance against select G10 counterparts with weaker near-term fundamentals”, said analysts at TD Securities. They look for downside risks in GBPUSD after the decision is fully absorbed. “We note that initial support is likely to emerge at the 18 Jan low (1.3520). This level also closely corresponds to the current 55-DMA (1.3524)”.
The greenback is holding onto most of its daily gains across the board, excluding GBP. The DXY trades at 91.50, about to post the highest close since November 30. Economic data from the US came in above expectations, and now attention turns to Friday’s Nonfarm Payrolls.
Technical levels
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