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Mar 18 - 11:55 AM

GBP/USD - COMMENT-Sterling Slides After BoE, May See Range Trade Ahead

By Paul Spirgel  —  Mar 18 - 09:58 AM

GBP/USD fell on Thursday after a less hawkish than expected BoE rate and APP hold, pushing sterling from 1.3960 to 1.3920, and could face range trading as most major central banks opt for status-quo accommodation.

With key central banks waiting for inflation to rise and hold above targets, most pairs could remain anchored near current levels, with volatility within a range driven by individual data releases.

In the absence of a pickup in Brexit or COVID anxieties, the current range finds its center near current levels by the rising 30-day moving average at 1.3918, with the 55-DMA at 1.3794 providing support and Feb 26's high of 1.4021 resistance.
Recent EUR/GBP weakness may help lift GBP/USD nearer the top of its recent range as EUR longs continue to unwind versus the dollar and GBP.

The BoE, not unlike the ECB nS8N2KW063 and Fed nS0N2JQ01G, remained cautious, noting near-term economic activity has been positive, owing to significant stimulus and the UK's, to date, successful vaccine rollout.
However, the bank cautioned the outlook for the economy during the pandemic recovery remains unusually uncertain.

Though vaccine and Brexit uncertainties have been rising recently GBP/USD remains relatively well bid as speculative traders continue to unwind long EUR futures positions 1099741NNET, eyeing a more diversified balance for their dwindling USD short.

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Source:
Refinitiv IFR Research/Market Commentary

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