GBP/USD Struggling to Sustain Gains As BoE Fails to Taper QE

Summary:

The GBP/USD pair is struggling to hang on to gains made post-BoE after the UK central bank failed to taper its QE program.

The GBP/USD recovered some ground following the monetary policy decision of the Bank of England. However, the pair struggles to retain gains made after the bank failed to taper its QE program.

The BoE left the interest rate unchanged at 0.1% in a unanimous verdict. The Asset Purchase Facility was also left intact at £895 billion after a majority vote of 8-1.

However, the GBP/USD has found it hard to maintain the buying momentum after the BoE failed to clarify the pathway towards QE tapering, which was a disappointment to the markets.

The BoE projects that the UK economy will grow 7.25% in 2021 and 5.75% in 2022. The average inflation rate is projected at 2.5%.

Despite some slight selling on the greenback in the market this Thursday, the 0.02% marginal gain for the pair as of the time of writing indicates that volume is low and traders are hedging against tomorrow’s NFP number from the US.

Technical levels to watch

The pair bounced off the 1.38616 support level but found the going beyond 1.39484 too tough to handle. The latter thus remains the price to beat for bulls attempting to retake the 2-week tops at 1.4005. This price level is the next target if the bulls can clear 1.39484. Beyond 1.4005, the next target lies at 1.40602, with 1.41535 coming into the picture if the advance is extended.

On the other hand, a decline below 1.38616 could be on the cards if the 1.39484 resistance stays intact to reinforce the progressively lower highs. This move opens the door towards 1.38126, with 1.37463 and 1.36771 serving as additional targets to the south.