GBP/USD rebounds modestly, still deep in negative after BoE

Cable moved of daily lows during the last hours, on the back a slide of the greenback, following weak US economic data. The pound is still sharply lower for the day, affected by the Bank of England decision and its Quarterly Inflation Report. 

Down on BoE, rebounds with ISM non-manufacturing 

GBP/USD was trading above 1.3250, at the highest since September but then turned sharply lower after the BoE decision and bottomed during Carney’s press conference at 1.3112, a 3-day low. 

The BoE kept its monetary policy unchanged as expected but didn’t point to more hawkish tone, that appeared to had been priced. “Markets seem to have been split over the potential that Haldane might join McCafferty and Saunders in dissenting on the Bank Rate. Haldane had recently stated that action had to be taken against rising inflation, but this was said in the context of low wage growth and so negative real income, especially in the less affluent areas in which he had been speaking,” wrote Tim Riddell, Research Analyst at Westpac.

Carney cools GBP optimism - ING

After being able to hold above 1.3100 it recovered ground supported by a slide of the US dollar across the board, following the ISM non-manufacturing report that showed a larger-than-expected decline to the lowest in 11 months.

US: ISM Non-Manufacturing plummets in July - Wells Fargo

The pair climbed to 1.3155 with the dollar slide. At the moment trades at 1.3140, down 80 pips for the day, the worst decline in a month. The pound is the worst performer on Thursday among the most traded currencies. 

GBP/USD Levels to watch 

The pair is consolidating below the 1.3150 area and also under a short-term uptrend line, contributing to the negative momentum. Below 1.3100 the correction could extend to the next key support at 1.3050. 

On the upside, the pound needs to rise and hold above 1.3160 in order to recover the initiative. Above the next resistance is seen at 1.3195, followed by 1.3245 (Aug 1 high).