GBP/USD consolidates the BOE-led sell-off, eyes NFP for next direction

GBP/USD extended its overnight consolidative mode into Asia, as the bears take a breather from the dovish BOE induced sell-off ahead of the highly-influential US payrolls data.

GBP/USD eyes 1.3000 on solid US wage growth

The spot continues to move back and forth in a 15-pips tight range, with any recovery capped near 1.3150 levels, as markets remain in a wait-and-see mode heading into the crucial US labour market report release.

The losses in Cable, however, remain capped amid broad based US dollar softness, as the US political concerns over Trump’s alleged links with Russia returns to markets, while the recent series of downbeat US economic data also exacerbates the pain in the buck.

On Thursday, the GBP/USD pair took a sharp U-turn from fresh eleven-month tops and plunged to the lowest levels in three days at 1.3113 levels, after the BOE policy decision disappointed the hawks and was viewed largely dovish by markets.

The BOE kept its monetary policy settings unadjusted, while the voting composition also remained unchanged at 6-2, with the BOE’s Chief Economist Haldane not joining two MPC members who had voted for a rate hike at the June meeting.

Further, downward revisions to both the UK CPI and GDP forecasts, as reflected in the bank’s quarterly inflation report (QIR) also added to the GBP sell-off.

Moving on, the next key determinant for future GBP/USD price-action remains the US NFP data, which will offer fresh insights on the US interest rates outlook this year.

GBP/USD levels to consider             

Valeria Bednarik, Chief Analyst at FXStreet noted: “Technically and for the short-term, the pair is now bearish as in the 4 hours chart, the price broke below its 20 SMA, now mostly flat above the current level, while technical indicators continue heading lower well below their mid-lines. Below the daily low, the pair will likely extend its slide, with the pair mostly seen ending the week near the 1.3000 figure. Support levels: 1.3110 1.3075 1.3030 Resistance levels: 1.3150 1.3190 1.3225.”