The GBPUSD pair has been consolidating near the lows of its range over the last couple of days as it awaits the BOE later in the day today. Not much of fireworks is expected from the BOE when they give their rate announcement and statement but the market would be keen to know what they have in mind so that it can decide which way to take the pound.
Pound Trying to Find Support
The price action over the last few days suggests that the high of the pound might be in for the short and medium term. After rising by around 800 pips within a couple of months, on the back of dollar strength and progress in the Brexit process, the prices have since fallen back and given up almost all the gains over the last few days. In fact, the prices have also lost the crucial support region of 1.40 and this could be a telling blow for the bulls.
Over the last few days, we have seen the dollar begin to rebound all across the board and as we have been saying over the last few days, we believe that more is to come from the dollar in the short and medium term as the market looks forward to rate hikes from the Fed. This could place the pound under serious pressure during this period and hence it is going to be a period of worry for the bulls.
Looking ahead to the rest of the day, we do not have any major news from the US but the focus of the market is likely to be fully on the pound as the market awaits the BOE. The BOE is expected to keep things steady, especially under the circumstances when the Brexit process is in full swing. But looking at the consolidation in the support region over the last couple of days, we believe that the pound may be looking to bounce from there though the 1.40 should cap any kind of bounce so far.
This article was originally posted on FX Empire
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