Sterling Takes a Bearish Hit Post BOE Update

GBPUSD is currently trading around 1.35180 and went as low as 1.3496 in US session on Thursday, slumped by almost 0.40% on dovish hold by BOE and forecast of subdued inflation. GBPUSD made a 4-month low of 1.3455 after the BOE despite some optimistic comments by Carney in the Q&A. The Bank of England left the interest rate unchanged at 0.50% in line with public expectations as MPC members voted 7-2 favoring the current status quo.

GBPUSD Suffers on Dovish BOE

The UK NIESR GDP estimate dropped to 0.1% this month, from 0.2% expected. That was another disappointing economic occurrence right before the BOE meeting. The BOE did acknowledge the deteriorating economic conditions though. While the outcome so far has been was dovish, BOE attempted to prevent Sterling’s value falling further stating that if economic growth picks up in the Q2, then they will get on with rate hikes in August. However investors have lost faith on sterling post BOE Governor Carney’s recent flip flops and Weak Q1 economic data resulting in huge sell off.

While this event could have triggered further bearish slide in GBPUSD exchange rate, disappointing US inflation data released in last two days weakened US dollar’s momentum which resulted in pair seeing range bound performance around 1.34 to 1.35 price range during Asian market hours on Friday. UK’s calendar on Thursday saw an overall mixed outcome and there is no major release scheduled today. US calendar has Preliminary Michigan Consumer sentiment and expectations data & Export / Import Price index data scheduled to release later today. US Federal Budget Balance released yesterday saw better than expected outcome, a hawkish data release could help US dollar break its standstill position with British sterling during American trading hours later today. Expected support and resistance for the pair are at 1.3430 / 1.3400 and 1.3650 / 1.3710 respectively.