GBP/USD Loses Steam As BoE Leaves Interest Rates and APF Unchanged

Summary:

Bank of England (BoE) leaves the interest rate and asset purchase facility unchanged, which disappoints investors and sends the GBP/USD off session highs.

The Bank of England (BoE) left its interest rate and other parameters unchanged, opting to stick to its stimulus package despite the risk of rising inflation in the UK. The interest rate stays at 0.1%, and the asset purchase facility amount also stays at 895 billion pounds. The BoE stuck with its projections for the UK economy, projecting a growth of 7.5% for 2021.

In explaining the bank’s decision, BoE Chief Andrew Bailey said in the press conference that the rise in inflation was due to supply bottlenecks and that the bank needed to have a clear path to the easing of its quantitative program.

The GBP/USD is off session highs after the BoE’s inaction but remains 0.14% higher on the day.

Technical Levels to Watch

The GBP/USD met resistance at 1.39484 but was beaten back for the third session in a row. If the sentiment on the pound sours further, a challenge on the 1.38616 support could be in the works. A further correction brings 1.38126 into the picture, with 1.37463 lining up as a potential downside target if the correction is deep.

On the flip side, bulls need to see a break of 1.39484 for the psychological resistance at 1.40051 to come into play. A further advance brings in 1.40602 and 1.41008 as potential targets to the north.