• Brexit uncertainties continue to dent sentiment surrounding the GBP.
• The continuation of the USD rally adds to the prevalent selling bias.
• Focus remains on the BoE’s Super Thursday/fresh Brexit developments.
The GBP/USD pair finally broke down of its Asian session consolidation phase and momentarily slipped below the 1.2900 handle, or over two-week lows in the last hour.
In absence of any relevant Brexit headlines, the UK-EU stalemate situation over the Irish backstop continued taking its toll on the British Pound and was seen as one of the key factors behind the pair’s reversal from the Asian session high level of 1.2962.
The pair remained under some selling pressure for the sixth consecutive session, exetnding its recent slide from over three-month tops, and was further pressurized by the continuation of the US Dollar rally, despite the recent dovish turn on rate hikes by the Federal Reserve.
The downfall, however, seemed cushioned, at least for the time being, as market participants now seemed reluctant to place any aggressive bets ahead of today’s key event risk – the latest BoE monetary policy update.
The BoE decision is scheduled to be announced at 12:00 GMT, which will be accompanied by the release of monetary policy summary and the Quarterly Inflation Report (QIR), and followed by the BoE Governor Mark Carney’s post-meeting press conference.
Apart from this, investors will also keep a close eye on the UK PM Theresa May’s meeting with the European Commission President Jean-Claude Juncker and seek concessions in relation to the Brexit backstop, which might infuse a fresh bout of volatility across the GBP pairs.
Technical levels to watch
A follow-through selling below the 1.2900 handle has the potential to continue dragging the pair further towards the 1.2870-65 intermediate support en-route 50-day SMA, around the 1.2800 round figure mark.
On the flip side, the 1.2960-80 region now seems to have emerged as an immediate strong hurdle and is closely followed by the key 1.30 psychological mark, above which the pair could head towards testing the 1.3060-65 supply zone.