- GBP/USD Up 0.3% To 1.2342
- BOE Maintain Bank Rate
- Focus on Non Farm Payroll
GBP/USD is trying to bounce back from one-month lows amidst U.S dollar strength across the board. The Pound has come under immense pressure amidst growing concerns about the health of the U.K economy at the backdrop of the COVID-19 fallout. Brexit uncertainty has also continued to take a toll on the Pound.
BOE Monetary Policy Impact
The dollar rallied up in Thursday trading session after the Bank of England unanimously voted to maintain Bank Rate at 0.1%. The central bank also voted 7-2 to keep the £200 billion government bond purchase program. The BOE says it maintained interest rate at 0.1% as a way of meeting the 2% inflation target as well as sustain growth and employment.
The BOE declaration sent the GBP/USD surging to the 1.2400 handle from lows of 1.2232 levels.
Time : 07-05-2020
Pivot : 1.2361
Technical View : Long Above 1.2381
Target : 1.2401 next 3 targets are 1.2426, 1.2506 and 1.2557
Comments : Neutral
Last Price : 1.2350
Technical View : Short below 1.2341
Target : 1.2321 next 3 targets are 1.2321, 1.2255, 1.2214 and 1.2124
Some of the key levels to watch after a recent spike are support at the 1.2355 level. Above the support level, the GBP/USD is likely to continue edging higher. However, a breach of the support level could see the pair dropping to lows of 1.2296.
Any upside run will have to contend with resistance at the 1.2451. A rally followed by a close should pave the way for the pair to rise to highs of 1.2530 levels.
However, the Pound faces an uphill task to hold on to the gains, given the broader U.S dollar strength. The dollar is strengthening against a basket of other major currencies as investors rush to it, given its safe-haven credentials.
Poor economic releases are another major headwind likely to continue piling pressure on the Pound against other currencies. The construction PMI released recently came in at 8.2 vs. an expectation of 22. The massive contraction affirms investors’ concerns that the Corona Pandemic is taking a toll on the economy given the stoppage of work in the construction industry amidst the pandemic.
Looking ahead, traders await the Non-Farm Payroll role that could weigh in on dollar strength in the Friday trading session. Likewise, unemployment data is another important economic data that the market awaits.