GBPUSD Drops After BOE Bailey’s Comments on Negative Rates
GBPUSD trading lower for the third consecutive trading session on fresh worries for a second lockdown in the UK as the sentiment remains fragile after the sharp correction in Wall Street. As traders waiting for Boris Johnson’s announcement later on the day, the expectations are for new measures and early closing of the pubs and restaurants while he would suggest the people to work from home. Many health officials warned that the UK would face a growing death rate as the new coronavirus cases have surpassed 6,000 daily.
Bank of England Will Everything to Support Economy
Bank of England Governor Andrew Bailey in a speech at the Chambers of Commerce said that UK economic recovery is relatively rapid and substantial while the third-quarter recovery is slightly ahead of the Bank of England expectations. The Governor also added that the bank will do everything to support the economy and had discussed further interest rates cuts and negative interest rates.
Bailey also said that labour demand is weak, and the unemployment rate is higher than the reported data. Investments are still soft, but the housing market is strong.
Later on the day, the focus will be on Jerome Powell testimony in front of congress.
GBPUSD Daily Technical Analysis
GBPUSD is 0.44% lower at 1.2750, hitting the lowest level since July 24. The pair hit the daily low after the BOE Governor comments and managed to bounce from the 200-day moving average.
Now the focus is at the 1.27 mark, which if breached would have negative implications for the pair. Next support for GBPUSD stands at 1.2666 the low from July 23.
On the upside, initial resistance for GBPUSD is at 1.2824 the daily top. The next resistance area for the pair would be met at 1.2963 the high from September 21. The 50-day moving average at 1.3008 would provide the next supply zone.