Markets got surprised by this morning’s Bank of England rate decision, despite them following market indications of a 25 bps rate-cut.
For those who haven’t seen the headlines, the BoE took their Main policy rate, the Bank Rate, from 4.25% to 4%.
Despite cuts being typically more bearish on currencies, it is always important to watch how the votes and the process towards the rate decision took place.
Particularly when the decision is well priced-in, like the 96% pre-cut price in for this BoE event, Participants then turn to communications from the Central Bank to see how future decisions might take place.
The Bank of England had to take a rare second vote to achieve the 25 bps outcome, as the initial decision did not reach a consensus (5 votes for a cut, 4 votes to maintain the rate).
With BoE’s Governor Bailey mentioning still-too-high inflation and growth risks, the communication has been considered Hawkish by participants, leading to a rebound in the Pound.
Let’s now look at GBP/USD multi-timeframe technicals to spot where the ongoing rise could be heading.
Despite it being a pre-rate decision post, I would advise to look at our EUR/GBP analysis to see on what factors move the European pair.
Read More: The US Dollar tries to find stable ground
A look to the current GBP performance vs Majors
GBPUSD multi-timeframe Technical Analysis
GBPUSD Daily Chart
The past trading weeks have been volatile for the major pair to say the least.
Cable had marked a top close to the 1.38 handle and has free-fallen since before marking its most recent lows at 1.31415.
Despite this morning’s rise after the BoE rate decision, the currency pair hasn’t broken out of its current downwards channel.
One setup to keep your eyes on is the formation of a Daily Head and Shoulders pattern that, if materializes, could lead to a fall back towards the 200-Day MA, currently at 1.2950.
A weekly close above 1.35 would invalidate this pattern but in the meantime, it is key to keep that formation in check.
Of course, a lot can happen before this so it’s essential investigate future data releases.
GBPUSD 4H Chart
Current trading levels are very important to the future outlooks for the pair.
Despite showing a breakout of the ongoing downwards channel, buyers will want to make a clear push and close above the daily 1.34370 highs.
Levels to watch for the pair:
Daily Resistance Levels
- 1.35 4H MA 200 and psychological level
- Main Resistance 2 1.36
- Resistance 3 1.37 Zone
Key Pivot Zone: 1.34 doji, daily highs 1.34370 and doji lows
Daily Support Levels
- Support 1 1.3260-1.33
- Support 2 1.3170 – 1.31850 – Most recent lows 1.3140
- S3 at 1.30 Zone (+/- 300 pips)
GBPUSD 30m Chart
We take a closer look to see the detailed levels of the key 1.34 Zone:
Some profit-taking is happening as the pair is moving to overbought on this timeframe with Markets showing an indecision doji within the key 1.34 Pivot Zone.
Any break above would point towards the 4H MA 200 right at the 200-period 4H MA,
On the other hand, a rejection lower would point to a retest of the upper bound of the channel in confluence with the 1.33 level.
Safe Trades!
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