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Jun 18 - 01:55 PM

GBP/USD - COMMENT-BoE Support Turns To Pressure As Sterling Falls Through Support

By Paul Spirgel  —  Jun 18 - 11:35 AM

Sterling crashed through support to session lows just above 1.2400, retreating from post-BoE flash highs by 1.2550 after the bank raised concerns about a slow recovery and negative rates.
Sterling's initial push higher came after the BoE announced an additional GBP 100bn in asset purchases, which was the consensus forecast but below the expectations of some nL8N2DV2K2nS8N2DF08I.
BoE comments aboutrising consumer spending and services output also helped the early boost.
But early bullishness dissipated after BoE Governor Andrew Bailey said negative rates were not in any sense imminent, which only managed to revive the issue for markets.
With UK growth expectations uncertain and markets suspicious about negative BoE rates, sterling bulls will need some help from EU-UK trade talks nL1N2DT0JV to jumpstart a rally.
A close below 55-DMA support by 1.2418 would put 1.2307, the 50% Fibo of March's 1.32-1.1413 dip, in focus.
Below that, bears would gain momentum for a run at 1.2075, the May 18 low, and COVID-related extreme troughs by 1.1413.


GBP Chart: Click here

Source:
Refinitiv IFR Research/Market Commentary

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