GBP/USD Daily Forecast – British Pound Gains Ground After Bank Of England Keeps Rate UnchangedBank of England announced that interest rate will stay at 0.1% while quantitative easing will be maintained at 645 billion pounds.
GBP/USD Video 07.05.20.
U.S. Initial Jobless Claims Report Is The Next Important Data Point Of The Day
Bank of England has just announced its interest rate decision and provided an update on its monetary policy.
As expected, the rate was kept at 0.1% since there is no sense to push it into the negative territory. The decision was unanimous.
At the same time, the Bank of England maintained its additional program of purchasing of 200 billion pounds worth of UK government bonds and sterling non-financial investment-grade corporate purchases.
Currently, the British quantitative easing program totals 645 billion pounds and it will stay at this level until the next interest rate decision. Interestingly, the vote was not unanimous as two members wanted to increase the quantitative easing program by 100 billion pounds.
In the U.S., traders will focus on the upcoming Initial Jobless Claims report. Analysts expect that 3 million Americans filed for unemployment benefits last week, taking the total number of people who lost their jobs during the coronavirus crisis to more than 33 million.
U.S. Continuous Jobless Claims report also presents material interest since it will show how many people who have previously lost their jobs managed to find new jobs in areas of the economy which were not hit hard by the pandemic.
The analysts expect that Continuous Jobless Claims will be close to 18 million. Note that the Continuous Jobless Claims data lags the Initial Jobless Claims data by one week.
GBP/USD is rebounding from the support level near 1.2300. The nearest resistance for the pair is located at the 20 EMA at 1.2420, followed by the resistance at the 50 EMA at 1.2450.
In all likelihood, the area between the 20 EMA and the 50 EMA will serve as one major resistance level rather than two separate ones, so GBP/USD will have to settle above the 50 EMA to continue the upside move.
In this case, GBP/USD will have another chance to test the resistance level at the recent highs at 1.2650. This level has already been tested two times but each attempt happened after a material upside move with no pullbacks, so chances to get past 1.2650 without stabilization below this level were slim.
On the support side, the breach of the support level at 1.2300 will lead to a test of the next support level at 1.2250.