GBP/USD drops back to test 1.3250 ahead of Carney

The GBP/USD pair popped to 1.3290 levels after the UK CPI met estimates, but quickly reversed the rally on the back of BOE-speaks.

GBP/USD back below 5-DMA at 1.3269

The spot is seen flirting with the midpoint of 1.32 handle over the last hour, as markets digest the latest comments on the monetary policy and inflation outlook, delivered by the newly appointed BOE PMC members Ramsden and Tenreyro during their testimony before the Treasury Select Committee.

BOE’s Tenreyro: MPC far from the point at which we will unwind QE

BOE’s Ramsden: Loss of market confidence could lead to higher BOE rates, weaker GBP

The major remains little impressed by the UK inflation report, as the core figures disappointment roil the sentiment around the pound, while a lack of clarity on the Brexit negotiations adds to the bearish undertone seen around Cable.

Further, the latest leg down can be also attributed to a pick-up in buying interest seen around the greenback across the board, as Treasury yields re-attempt gains amid expectations of a hawkish Fed Governor to be appointed by Trump.

The pair now eagerly awaits the BOE Governor Carney’s speech for fresh insights on the interest rates outlook.

GBP/USD Technical View

FX Strategists at UOB group noted: “GBP traded sideways for most part of yesterday before dropping sharply during late NY hours to hit a low of 1.3225. The decline appears to be running ahead of itself but another leg lower towards 1.3190/95 seems likely. That said, a sustained move below this level is not expected. Resistance is at 1.3290 ahead of the high seen near 1.3315 early yesterday”.