GBPUSD Takes a Bearish Hit over EU & BOE Woes

GBP has taken a nose dive on bearish trend for second consecutive trading session today. While GBP was steep hit due to bad CPI data yesterday, EU’s decision to reject UK Prime Minister Theresa May’s brexit Irish border solution and BOE Governor Mark Carney’s speech continued to further dampen GBP’s Momentum. An Article by The Telegraph reported without naming the source that EU has rejected Britain’s proposal for avoiding a hard border in Northern Ireland post a meeting between senior EU officials and Olly Robbins, the UK’s lead Brexit negotiator in which the proposal was subjected to detailed forensic rebuttal where “it was made clear that none of the UK’s customs options will work”.

GBPUSD Suffers

Similarly BOE Governor Mark Carney dampened widespread expectations for an interest rate hike in May stating there are other meetings available this year but it is likely that there will be interest rate hikes within this year (in an interview to BBC news). His reason to delay the decision was that mixed economic reading and proceedings of Brexit talks. Figures this week showed Britain’s unemployment rate fell to a 42-year low, but inflation dropped more sharply in the first quarter than the BoE had expected and Retail sales data for March also below expectation.

Carney also said uncertainty around Brexit had prevented what would otherwise have been a “surge in investment. Unfortunately that means in the short term that the speed limit of the British economy is not increasing. Productivity is not increasing, which will limit the rate at which people’s wages can pick up. Ultimately, the outcome of Britain’s divorce talks with the European Union would be the biggest factor in economic decisions in the coming years”. Thus central bank Monetary Policy Committee has decided to wait patiently and adjust to the impact of brexit decisions in order to keep the economy on a stable path. Expected support and resistance values for GBPUSD in short term are at 1.395 & 1.424 (for next 30 trading sessions) and long term values are at 1.368 & 1.440 (for next 100 trading sessions) respectively.