GBP/USD Outlook: A Dovish BoE Could Send the Pair Plunging Below 1.35

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The Pound Sterling continues to struggle against the US Dollar ahead of the meeting by the Bank of England (BoE) on Thursday. A combination of bullish sentiment on the greenback and fears that the BoE could pull off a dovish surprise on Thursday (as per negative rates), continues to exert downward pressure on the price.

However, the GBP/USD appears to have found support at 1.36, following enthusiasm about the UK’s vaccine rollout. Also, news that the Oxford coronavirus vaccine’s single-shot efficacy appears to have upped the chances of a faster recovery, thus supporting the Pound. 

Thursday’s BoE meeting will feature the findings of the consultation the apex bank had engaged in on the negative rates issue. This could be a volatile day for the pair. 

Technical Levels to Watch

The 1.36117 support is the critical barrier preventing sellers from initiating a full-scale selloff on the GBP/USD, following the breakdown of the rising wedge on the daily chart. If the BoE consultation points to a dovish stance, we could see this support give way, with price aiming for the projected measured move target at 1.32663. This measured move from the wedge’s breakdown has to take out support barriers at 1.35134, 1.34765, 1.33951 and 1.33193 along the way.

On the flip side, if the BoE dismisses the negative interest rate notion once more, then 1.36117 could serve as a springboard for recovery on the pair. This recovery move would target 1.37025 initially, with 1.37916 standing as the barrier to new multi-year highs.

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GBP/USD Daily Chart

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