- Summary:
- The GBPUSD pair has moved above the resistance level of 1.3000 after the dovish Bank of England decision. Bulls are now eying 1.3100
The GBP to USD (GBPUSD) pair is wavering after the Bank of England decision. The pair is trading at 1.3012, which is slightly above the intraday low of 1.2931.
In its interest rate decision, the bank did what most analysts were expecting. All the nine members of the committee voted to leave interest rate unchanged at 0.10%. They also decided to increase the target of quantitative easing by £150 billion to £875 billion. That was £50 billion higher than the consensus estimate.
In its accompanying statement, the bank lamented about the rising number of Covid infections in the UK. That has led to the national government launching new restrictions in England. Local governments have also tightened their restrictions, which will lead to a slowdown of the economy. Indeed, the bank noted that consumer spending had started to slowdown.
Most importantly, the bank said that it will not increase interest rates until there is clear evidence that the economy is recovering. That could mean that rates will remain at the current level or even lower in the next few years.
The GBPUSD is also reacting to the expected gridlock in the United States and the Federal Reserve interest rate decision. The Fed will release its decision at 19:00 GMT. Like the BOE, investors expect the bank to leave interest rates unchanged and continue with its quantitative easing.
GBPUSD technical outlook
On the four-hour chart, we see that the GBP to USD pair has been rising. It has risen from a low of 1.2675 to today’s high of 1.3174. The pair has also formed an ascending channel that is shown in green. It has also moved above the 50-day and 25-day exponential moving averages. Most importantly, the price has moved above the lower side of the channel.
Therefore, the pair is likely to continue rising as bulls aim for the upper side of the channel at 1.3100. This thesis will be invalidated if the price moves below the support at 1.2675.
GBP to USD technical chart
