GBP/USD falls to test daily lows as the US dollar gains momentum

• Pound remains among the worst performers on Thursday after BoE.
• Cable resumes downside after being unable to recover 1.4000.

The GBP/USD is trading slightly above 1.3900, under pressure amid a rally of the US dollar and following a sharp slide of the pound on the back of the Bank of England meeting.

BoE and US dollar hit GBP/USD

The pound tumbled after the BoE released its statement from the latest Monetary Policy Committee (MPC). The central bank kept policy unchanged as expected but it was seen as a dovish meeting, triggering the slide of the pound. GBP/USD bottomed t 1.3888 and then bounced to the upside finding resistance at 1.3930. Recently it tested the lows.

“This clearly wasn’t the hawkish tilt on which some market participants had placed their bets. The attention will quickly shift to the August meeting when the MPC has a full set of fresh staff forecasts at its disposal and will have to make a new decision on the pace of gilt purchases”, explained analysts at Rabobank.

The US dollar gained momentum during the American session. Economic data from the US was mostly ignored by market participants and the currency trimmed losses across the board during the last hours, probably amid some optimism about a bipartisan deal in the US Congress for Biden’s infrastructure program.

Cable resumes slide

The 1.4000 zone capped the recovery of the GBP/USD after falling sharply last week. The pound failed to regain that area and started to pull back. On Thursday, the pair appears to be resuming the downside. The next strong support is seen at 1.3850/60, a break lower would add more pressure.

On the upside, a recovery above 1.4000 would alleviate the negative bias, and should favor an extension to 1.4065 (20-day moving average).

Technical levels