The pound fell sharply alongside a damning report on business confidence on Friday. The worries about the UK economy post-Brexit did not fall on deaf ears.
BOE member Martin Weale was skeptical of adding further stimulus. But the services PMI seemed to have changed his mind. In an interview with the Financial Times, Weale said that the weak PMI will be “very material” to next week’s decision. He added that it was much worse than expected. And the key point is that he now sees things rather differently.
When a hawk goes dovish, this is news. And markets move on news. GBP/USD is pressured to the downside, erasing the small recovery it enjoyed prior to the release of his comments.
Pound/dollar is currently trading at 1.3085, down around 50 pips on the day, after already falling to 1.3056, below the lows seen on Friday. The next line of support is 1.30, which is a round number.
It is followed by the 1.2850 level, last seen when the contest for the UK premiership was just about to close. And the last level is 1.2790, the 31 year low.
On the topside, we find 1.3250, followed by 1.3350 and 1.3480.
Here is how it looks on the chart:
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