The GBP/USD pair extended post-BoE downward spiral and tumbled to one-week low near mid-1.2800s during Governor Mark Carney’s post-meeting press conference.
Spot met with fresh supply after Carney downplayed price pressure by stating that the current inflation trajectory was primarily led by sterling depreciation and reiterated that current monetary policy was appropriate.
Carney also showed concerns about weak wage growth, which were partly led by poor productivity, while there was evidence that some firms are hesitating to bring in higher wage costs during uncertainty around Brexit.
Carney’s comments clearly suggested that the economic slowdown in the first quarter of 2017 was not primarily led by Brexit worries and justified central bank’s downward revision of GDP growth forecast for 2017.
Earlier, the BoE’s MPC voted 7-1 to leave interest rates unchanged at record low level of 0.25% and there was a unanimous vote to keep government bond purchase program unchanged at £435 billion.
The dovish tilt attracted some fresh selling pressure across GBP cross, with the pair reversing majority of its gains recorded over the past couple of weeks.
Next on tap would be the US economic docket featuring the release of weekly jobless claims and PPI ahead of the Fedspeaks.
Technical levels to watch
Immediate support is pegged near 1.2835-30 zone, below which the pair seems more likely to break below the 1.2800 handle and head towards testing its next support near 1.2775-70 region.
On the upside, any recovery move now seems to confront resistance near the 1.2900 handle, which if cleared could lift the pair back towards mid-1.2900s intermediate resistance en-route the key 1.30 psychological mark.