The Great Britain Pound (GBP) rallied against the US Dollar (USD) yesterday, increasing the price of cable to more than 1.2450 after the Bank of England (BoE) announced its monetary policy. The technical bias still remains bearish because of a Lower Low in the recent downside move.
As of this writing, the pair is being traded near 1.2474. A hurdle may be noted around 1.2644 which is the 23.6% fib level ahead of 1.2754, the high of a giant bearish candle which is acting as a mother candle for the inside bar breakout trade setup. A break above 1.2754 shall target next immediate resistance which can be seen around 1.2866.
On the downside, the pair is expected to find a support around 1.2298, the intraday low of yesterday ahead of 1.2083, the swing low of the last major downside move and then 1.1800, the swing low of the giant bearish candle which is also the low of 2016. The technical bias will remain bearish as long as the 1.2866 resistance area is intact.
BoE Monetary Policy
At its latest policy meeting, the Bank of England Monetary Policy Committee (MPC) left interest rates on hold at 0.25%. The amount of government bond purchases was also left at £435bn and there was unanimous support for both decisions. Both decisions were in line with consensus forecasts. According to the MPC, the near-term outlook for activity is stronger than expected three months ago with household spending increasing at a faster pace and the housing markets has been more resilient than expected, although the commercial market remains subdued.
Considering the overall technical and fundamental outlook, buying or selling the pair after a breakout through the giant bearish candle could be a good strategy in medium term.