GBP/USD reacts to Bank of England

Note: This section contains information in English only.
Source: Dukascopy Bank SA


On May 5th, the Bank of England hiked its interest rate from 0.75% up to 1.00%, which is the highest level in 13 years. In addition, the bank revealed how the monetary policy makers voted on the rate hike. Namely, six of the committee voted for a 0.25% hike, but three members wanted a 0.50% hike that would set the rate at 1.25%. Meanwhile, the central bank revealed that in its opinion recent global events have led to a deterioration of the economic outlook for the whole world and the United Kingdom.

The GBP/USD reacted with an initial 35 base point spike up to the 1.2580 level. However, the rate started to plummet afterwards By 12:00 GMT, the currency pair had reached the 1.2395 mark via a 184 base point or 1.47% decline.

From a technical analysis perspective, the exchange rate reached below the support zone at 1.2413/1.2423 and confirmed it as resistance, before resuming to move downwards. A continuation of the decline might find support in the 1.2300, 1.2250 and 1.2200 levels.

On the other hand, a potential recovery would have to pass the 1.2413/1.2423 zone, prior to testing the resistance of the 1.2450 and 1.2500 levels.
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