GBP/USD: Sellers Take Control in London, BoE Up Next
GBP/USD has fallen sharply at the London open, printing its lowest for the day near 1.44 handle after successive topside failures through 1.4450 in Asia, which saw the risk sentiment improved a touch ahead of the BoE inflation report.
BoE inflation report holds key
According to Rabobank Research Team: "Today's release of the May
Inflation Report gives the BoE the opportunity to give recent weak
economic data releases some more context. The Bank’s current projections
for GDP growth are well above those in the market. Given the recent
spate of soft data releases, there seems to be a strong chance that the
BoE may revise down its projections for economic activity in its May
Inflation Report. The likelihood of changes to the inflation outlook,
however, are less straightforward."
GBP/USD technicals
Technically, Haresh Menghani,
Analyst at FXStreet, notes that "the pair seems well-staged for
short-term technical break-out of a descending trend-channel, with a
potential of follow through buying interest with the impending BoE
decision."
Should GBP/USD recover 1.4450, Haresh sees immediate resistance at
1.4490-1.4500 handle, ahead of 1.4535-40 horizontal resistance and
1.4590-1.4600, the Analyst notes. On the downside, Haresh views 1.4400
handle as key support, adding that "below the 100-day SMA support is
1.4360 and ahead towards testing its next major support near 1.4300
confluence region, comprising of the descending trend-channel support
and 61.8% Fibonacci retracement level."