Daily Market Recap -GBPUSD Moves Higher After BoE

The British pound is gaining against the US dollar on Thursday after the Bank of England (BoE) left its interest rates and overall monetary policy unchanged. Although the news was expected, the additional comment made by the central bank rejecting negative rates was welcomed by GBPUSD bulls.

The pair have now set a new high of 1.31858, levels unseen since March. A cross above 1.32 would set a new year to date high. The likelihood of a surge above that level remains probable, though holding firm, in the long run, may be difficult to achieve given the fundamentals in the British pound remain shaky.

Without mentioning the impact of the ongoing health crisis and the state of the economic recovery in the country, the UK will still have to reassure investors ahead of the end of the year deadline that a trade agreement will be reached between the UK and EU.

For now, there are little indications that a trade deal will be struck within the current timeframe. Any extension in the deadline will likely provide strong headwinds and keep the British pound under pressure.

From a technical perspective, a trade above 1.31858 will put into play a test of the 1.32 resistance level. Blowing past that would clear the way towards the next significant resistance at 1.33438.

(Chart Source: Tradingview 06.08.2020)

On the flip side, the round 1.30 mark should provide adequate support for any pullbacks in the GBPUSD given the seemingly strong demand present below 1.30. Price action around the 0.236 Fibonacci retracement level will dictate whether a push for the 1.28 will be feasible in the event of a strong correction.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.