The GBP/USD pair fell 0.29% on Thursday after the Bank of England (BoE) failed to deliver the hawkish tilt that the markets had hoped for.
The BoE voted unanimously to retain the 0.1% interest rate and left the asset purchase facility (APF) targets at current levels in an 8-1 vote. The dissenting vote came from known hawk Andy Haldane in his last participation as the BoE’s Chief Economist. The markets were expecting the BoE to deliver a hawkish surprise with a marked reduction of the APF. However, this was not to be, and the asset purchase facility remains at 895 billion pounds, leading to a selloff on the GBP/USD.
Technical Outlook for GBP/USD
The bearish daily candle has violated the 1.3948 price mark well below the 3% penetration levels needed to confirm a breakdown. Despite a slight pullback, the bias remains bearish in the short-term, and follow-through selling showcased by a bearish outside day candle could send the pair to the 1.38616 price support. Further decline could extend the drop towards 1.38126, with 1.37463 also waiting in the wings as a potential end-point for the evolving bearish flag pattern.
On the other end of the rope, failure to establish adequate selling pressure could lead to a recovery move that takes out 1.4005, thus invalidating the pattern. This would clear the path towards 1.40602 and provide a pathway towards the neckline of the rounding top at the 1.41000 psychological resistance level.