The couple went up to 1,3355 on Thursday when the markets prepared for the current meeting of the Bank of England (BOE). The merchants are closely observing two key factors: the voting division between the members of the Monetary Policy Committee (MPC) and any signal with respect to the movements of future rates.
The Central Bank is expected to reduce interest rates at 25 basic points (BP) to 4.00%. However, it is speculated that some members, such as Swati Dingra or Alan Taylor, could boost a more aggressive reduction of 50 BPS, as seen in May. If this occurs, particularly if accompanied by a change in the usual cautious tone of BOE, the pound could be under significant sales pressure.
Currently, markets have a large extent in a cutting quarterfinals. However, uncertainty remains around the future path of interest rates. Although it remains high to 3.6%, well above the objective of 2%, the economy is weakening and the labor market shows signs of tension.
The reference scenario suggests that the BOE will maintain a gradual approach to data dependent, with possible quarterly cuts. However, any deviation, such as a more aggressive voting division or a request guide, could significantly change the feeling of the market.
Technical analysis: GBP/USD
Figure H4:
The GBP/USD torque has become in relation to 1,3366 in a technical correction. It is likely that it is a fifth wave down to 1,2942, potentially followed by a corrective rebound at 1,3366. This perspective is compatible with the MACD indicator, with its signal line that looms near zero, indicating that the downward impulse can be resumed soon.
Figure H1:
A corrective wave is being formed after the recent decrease. The pair is currently consolidating around 1,3273, a break above this range could see an impulse towards 1,3377. However, when reaching this area, a new decrease towards 1,3160 is anticipated. A breakdown under this would open the way to 1,2942. This bearish scenario is supported by the stochastic oscillator, with the signal line below 80 and tending to 20.
Conclusion
Libra remains vulnerable ahead of the BOE decision, with biased risks towards greater weakness if the Central Bank adopts a more ideal position. Technically, the configuration points to a resumption of the bearish trend, with key levels in 1,3160 and 1,2942 in focus.
By analytical department of Roboforex
Discharge of responsibility: Any forecast contained in this document is based on the author's particular opinion. This analysis may not be treated as commercial advice. Roboforex has no responsibility for commercial results based on commercial recommendations and reviews contained in this document.
