GBP/USD Risks Remain to the Downside on Latest BoE Talk, UK Sales Data
British Pound (GBP) Forecasts, Charts and Analysis:
- Economic recovery may take longer than previously expected.
- BoE not ruling out further QE measures, open minded on negative rates.
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GBP/USD Back Below 1.2200 on Central Bank Latest
The British Pound is under renewed selling pressure this morning after BoE deputy governor for banking and markets, Dave Ramsden, said that the central bank is keeping ‘our whole tool set under active review’, echoing comments made by other BoE members this week. Ramsden, speaking to Reuters, added that it was perfectly reasonable to have an ‘open mind’ on negative interest rates and that the BoE had ‘quite a lot of headroom’ to buy more UK gilts, leaving the door open for a further increase in the current QE program.
Earlier in the session the latest look at the UK high street painted a bleak picture. Retail sales fell by a record 18.1% in April – following the 5.2 fall in March – with clothes sales down by 50.2% – after having already slumped by 34.9% in the prior month. Online sales continued to soar and were up 30.7% in April. Official UK borrowing figures came in worse than expected, highlighting the impact of COVID-19 on the country’s finances.
GBPUSD has printed a set of lower highs and lower lows over the past four sessions as positive sentiment in the British Pound wanes. Monday’s low at 1.2076 may soon come under pressure if the 38.2% Fibonacci retracement level at 1.2095 fails to hold, leaving further losses down to the 23.6% Fib level at 1.1834 possible. To regain a bullish bias, the pair need to break above a cluster of recent highs, the 50% Fib at 1.2306 ahead of the 20-dma at 1.2312 and the 50-dma at 1.2367.
GBP/USD Daily Price Chart (November 2019 – May 22, 2020)
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