GBPUSD Starts the Week with Slight Recovery Ahead of BOE’s Interest Rate Update

The GBP/USD is catching a relief lift in the Asia session, pushing back into 1.3560 after dipping to 1.3486 to end last week on Friday. Sterling sits at the bottom of a long fall as the Bank Of England has been forced to turn dovish once again. Monday is a quiet affair for the Sterling with little on the economic calendar, reflecting most of the upcoming week, until Thursday hits. Thursday brings the Bank of England’s (BoE) May rate call, a highly-anticipated monetary policy meeting for the UK.Traders largely expected a rate increase from the BOE this month, contributing to the GBP’s rise in recent months.

GBPUSD Near Support

Following a series of disappointing economic data expectations of a rate hike from the BOE have all but evaporated and the central bank is expected to walk back their previously-hawkish rhetoric once again. The Pound can currently be viewed as the weakest currency across the board, falling against the greenback to 1.3484 it’s lowest since January 11 last Friday. The main driver for this bearish decline is decreasing hope of a BOE’s rate hike this month, diluted in poor UK data and increasing divergences about Brexit strategy within May’s cabinet. Broad dollar’s strength added to the negative momentum of the pair. Along with central bank’s monetary policy meeting this Thursday the country will also release its Industrial Production figures for March.

A hike this time would be a positive surprise for market players, but a “dovish hike” with Governor Carney delaying any possible future move will keep Sterling under pressure. Investors will also closely watch the BOE’s quarterly inflation report, to be released within the event. The pair fell for a ninth consecutive day last Friday, lifting odds for an upward corrective movement ahead, but it could be reduced to some consolidation around current levels if demand for the greenback continues to increase. Expected support and resistance for the pair are at 1.3510/1.3485 and 1.3610/1.3645 respectively.