At midnight to Thursday, the GBP/USD found support in the 1.2320 mark. By mid-day the rate had tested the 50.00% Fibo at the 1.2418 level and bounced off it. The high volatility was caused by the Bank of England rate announcement.
In the meantime, the pair had pierced the support of the large scale ascending triangle pattern.
BoE Monetary Policy Summary The British Pound appreciated against the US Dollar, following the BOE Monetary Policy Summary release on Thursday at 06:00 GMT. The GBP/USD exchange currency rate gained 42 pips or 0.34% after the release. The Pound continued trading at the 1.2380 level against the Greenback after the release.The Bank of England released the Official Bank Rate data, which came out in line with the expectations of 0.10%.
According to the official release: "Our MPC voted unanimously to maintain Bank Rate at 0.1%. The Committee voted by a majority of 7-2 for the Bank of England to continue with the programme of £200 billion of UK government bond and sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, to take the total stock of these purchases to £645 billion."
GBP/USD reaction to the event
Economic Calendar
On Friday, the week will end with the employment data release from the United States, on Friday at 12:30 GMT.
Next week, monthly US inflation and retail sales data sets are bound to cause notable reactions, as they have done in the past. Namely, US CPI on Tuesday, US PPI on Wednesday and US Retail Sales on Friday are being released at 12:30 GMT.
In addition, some market participants are bound to watch the UK GDP and Manufacturing data being released on Wednesday at 08:30 GMT.
GBP/USD short-term review
Yesterday, the GBP/USD exchange rate broke the lower boundary of the descending triangle pattern in the 1.2350 area. During Thursday morning, the rate was testing the 55-hour SMA near 1.2400.Given that the currency pair is also pressured by the 100– and 200-hour SMAs near 1.2450, it is likely that some downside potential could prevail in the market. In this case the pair could gain support from the monthly S1 at 1.2292.
If the given support level holds, it is likely that short-term consolidation could occur in the market. Otherwise, the exchange rate could target the psychological level at 1.2250.
Hourly Chart
On the daily candle chart, the ascending triangle pattern can be observed better. A supporting ascending trend line is pushing the rate up. Meanwhile, the rate faces a horizontal resistance, which keeps the GBP/USD below 1.2640.
Daily chart
Read More: Technical Analysis
Sentiment remains unchanged
On Tuesday, the sentiment on the Swiss Foreign Exchange was 55% long. Since mid-Wednesday, the sentiment was 54% long.
Namely, 54% of open GBP/USD position volume was in long positions
Namely, 54% of open GBP/USD position volume was in long positions