- GBP/USD four-day rally loses steam amid USD bounce.
- BoE to raise interest rates by 25 basis points, more aggressiveness needed to boost GBP.
- GBP/USD finds no acceptance above 21-day SMA ahead of BoE.
GBP/USD is struggling against 1.3550, looking to extend its pullback from an 8-day high at 1.3587, as US dollar bulls return to the market amid risk-off market sentiment.
GBP/USD is ending its four-day rally as well as pair bulls turn cautious and refrain from opening new pound positions ahead of the Bank of England (BoE) decision.
The BoE is likely to raise interest rates by a further 25 basis points to 0.50% this ‘Super Thursday’, although it could lead to a “sell the fact” reaction in the pound as a 25 point hike is already priced in. in the market price.
More aggressiveness is needed from the BoE to revive the uptrend in GBP/USD. The ECB’s decision will also be watched by investors for any crossover impact on GBP/USD.
Looking at the GBP/USD daily chart, the pair is retracing below the 21-day moving average at 1.3560.
Further decline will see a test of the 100-day SMA at 1.3513. The next target on the downside is at the round level of 1.3500.
The 14-day RSI is turning down towards the midline, supporting the latest pullback in price.
GBP/USD daily chart
However, if the bulls regain control, then acceptance above the 21 SMA is critical to revive the upside momentum.
Further up, the 2nd Feb highs of 1.3587 will be retested, opening the doors to retake the 1.3600 level.
GBP/USD additional technical levels
Source: Fx Street
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