- Summary:
- GBPUSD was the strongest performer among the major currencies yesterday as the BOE hinted that it may not follow other central banks in cutting rates.
GBPUSD rose by over 100 pips in yesterday’s trading after a Bank of England (BOE) official hinted that the central bank is not keen on cutting rates like its counterparts. The currency pair bounced from its intraday lows at 1.2769 and rallied to 1.2871. By the New York session close, GBPUSD had settled at 1.2870 which was 59 pips above its opening price.
According to the BOE’s incoming Governor Andrew Bailey, the central bank will need to assess more evidence before making changes to its monetary policy. This was considered widely-hawkish because it comes after a series of rate cuts from major central banks like the RBA, Fed, HKMA, and BOC.
Later today, we may get more insight into the BOE’s stance. At 5:00 pm GMT, the outgoing central bank head Mark Carney is scheduled to make a speech. Remarks which counter that of Bailey could push GBPUSD lower.
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GBPUSD Outlook
On the hourly chart, we can see that a bullish flag has materialized on GBPUSD. This is characterized by a strong bullish rally followed by a consolidation. A break above the resistance at the 200 SMA at 1.2877 could mean that GBPUSD will trade higher. The 4-hour chart shows that there is potential resistance at 1.2930. This price coincides with the falling trend line (from connecting the highs of January 31 and February 25). It also aligns with the 100 SMA.
On the other hand, a close below the Asian session lows at 1.2868 could mean that there are still sellers in the market. GBPUSD could then retrace its losses back to 1.2810 where it could find support at the 100 SMA.