Today (4/9), the Bank of England (BoE) voted to maintain the benchmark interest rate at 0.50% while keeping the purchase program at 375B pounds. This was the much expected result. In the previous meeting, we saw that the members who voted to raise rates retreated from the hawkish stance, so we can say that the BoE is either dovish or neutral. We won’t know if there was further shift in members’ votes until the minutes are released 2 weeks from now.
Meanwhile, the GBP/USD fell after the BoE statement, but we shouldn’t read too much into it. It is still trading within consolidation, and the prevailing trend has been bearish anyway and price was retreating from the recent consolidation resistance during the 4/8 session.
Now, cable is below the triangle support in the 4H chart as well as the 200-, 100-, and 50-period simple moving averages. The RSI is also falling below 40, which reflects loss of the prevailing short-term bullish momentum. The pair now looks poised to test the 1.4635 low on the year with risk of extending further.
Let’s take a look at the 1H chart for a possible sell-on-the-rally trade idea.
In the 1H chart we also see bearish technicals as price is trading under the moving averages. The RSI has tagged below 30 which shows initiation of the bearish momentum in this time-frame.
Now, if there is a pullback, let’s monitor the 1.48-1.4825 area. If price approaches this area and the 1H RSI is back near 60, let’s see if there is resistance. If sellers can halt the rally with RSI around 60, that means the bearish momentum is still in play, and we should expect a bearish attempt to the 1.4635 low.
At this point a break above 1.4850 would kill the bearish bias and put pressure back towards the common consolidation resistance around 1.4990-1.50
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