The GBP/USD has plunged today after the BOE, the price has decreased more than 220 pips, have reached fresh new lows today and could drop further tomorrow because the currency pair remains under massive selling pressure, right is challenging important support levels, we’ll have to wait till we’ll have a fresh signal. The price has erased the last day’s gain, the drop was somehow expected because the price had reached an important resistance level and have failed to close above this upside obstacle, the perspective remains bearish because the buyers have failed to change he sentiment.
The Cable has decreased sharply as the Bank of England has cut the Official Bank Rate from 0.50% to 0.25%, the rate decrease was forecasted by the specialists, so the GBP/USD drop was somehow expected. The MPC members have voted unanimously for this decision, have voted as expected. The surprise has come from the Asset Purchase Facility, which was increased from 375B to 435B, the Monetary Policy Committee members have voted by a majority of 6 to 3 to increase the stock of the asset purchases.
The GBP/USD has decreased even if the United States economic data continues to come worse, the Jobless Claims have increased further, from 266K jobs to 269K jobs in the previous week, the currency traders have expected to see a decrease to 265K, but unfortunately the economic indicator has reached the highest level of the last 7-weeks, moreover the Factory Orders have decreased again, have fallen by 1.5%, more compared to the 1.2% drop from the previous reading period, however the rate has come better than the -1.8% estimate.

The price has found resistance at the sliding parallel line and now have dropped below the 1.3117 static support, the rate is expected to approach and reach the lower median line of the ascending pitchfork, the downward momentum could be stopped by this line, but any drop below this dynamic support will open the door for more declines. The GBP/USD continues to be under selling pressure because has failed once again to jump and stabilize above the sliding parallel line (descending dotted line), the rate has dropped also below the 50% Fibonacci line, but we’ll have to wait till we’ll have another opportunity to go short on this pair. We’ll have a selling opportunity if the rate will escape from the ascending pitchfork, personally I’ll wait till the price will test the confluence area formed at the intersection of the lower median line (lml) with the 50% Fibonacci line.

The rate continues to move sideways on the short term, the perspective remains bullish on the short term as long as the rate is trading inside the ascending pitchfork, we could have another leg higher if the lower median line will hold at the breakdown attempt, maybe we’ll have a clear direction tomorrow after the US economic data will be released.

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Olimpiu Tuns

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