GBP/USD Surges on BoE Comments, Just Shy of 1.4600 Mark

GBP/USD Surges on BoE Comments, Just Shy of 1.4600 Mark

24 May 2016, 11:32
Roberto Jacobs
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GBP/USD Surges on BoE Comments, Just Shy of 1.4600 Mark

The GBP/USD pair rallied from 1.4474 and extended its up-move beyond 1.4550 as BOE Governor and several MPC members begin their testimony on inflation and the economic outlook before the Parliament's Treasury Committee.

The pair's recovery from day's through level of 1.4474 was led by the latest 'Brexit' poll results that continued to show lead for the 'Remain' camp. Adding to the bullish momentum, BOE MPC Annual Report indicated that UK inflation is likely to rise gradually through 2016. However, the central bank remains concerned over the uncertainty surrounding 'Brexit', which could be cause for an economic slowdown and drag the British Pound lower.

The pair shrugged off 'Brexit' slowdown worries and pushed the GBP/USD pair through 1.4550 resistance on BoE's expectations of a pick-up in inflation during 2016. The pair is now moved within striking distance of reclaiming 1.4600 handle.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet notes, "the pair keeps paring gains around the 50% retracement of its latest decline around 1.4550, the level to beat to confirm further gains. In the 4 hours chart, the technical indicators continue recovering from oversold levels, but remain within negative territory, while the price struggles to overcome its 20 SMA which maintains a mild bearish slope."

"An extension beyond 1.4550, should lead to an advance up to 1.4600/10 the 61.8% retracement of the same bearish run. The immediate support is 1.4495, and slides below the level should see the pair retreating towards the 1.4440/60 region, en route to 1.4400."


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