BANK OF ENGLAND DEMONSTRATES HAWKISH RHETORIC

The GBPUSD price keeps testing resistance at 1.2980 after it left the limits of the local rising channel. In case of overcoming this level the next targets will be 1.3050 and 1.3110. What triggered the sharp increase was the statement by Mark Carney, Governor of the Bank of England.

Carney stressed that monetary stimulus may be reduced in the future which means a possible interest rate hike from the current level of 0.25%. Monetary policy tightening traditionally leads to the appreciation of a nation’s currency, but to take such a step the Bank of England has to be confident in a positive outcome from the Brexit negotiations for the UK.

Today the mood of traders will be influenced by the data on mortgage approvals in the UK at 08:30 GMT and final GDP growth report in the US for the first quarter at 12:30 GMT. The weakness of the greenback was caused by doubts in the capability of Trump’s administration to conduct previously declared reforms. In case of a descending price correction, the nearest support level will be at 1.2890. After breaking through this level the price decline may continue to 1.2800.