GBP/USD fades hawkish BOE-led bullish, retreats over 50-pips from 1.28 neighborhood

The GBP/USD pair faded hawkish BOE led knee-jerk bullish spike and retreated over 50-pips from the 1.28 neighborhood.

The pair got a boost after BOE’s MPC unexpectedly voted 5-3 to leave interest rates on hold, indicating eroding tolerance for above target inflation. Adding to this, the central bank also expected Q1 GDP growth to be revised higher to 0.3% and see Q2 growth at 0.4%, which added to the hawkish outlook and lifted the British Pound across the board.

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The immediate positive reaction, however, turned out to be short-lived as sentiment around the British Pound remained weak in wake of the recent economic and political troubles, and the impending Brexit negotiations.

Meanwhile, the US Dollar up-move, led by hawkish Fed monetary policy outlook, got an additional boost from today’s better-than-expected release of weekly jobless claims and Empire state manufacturing index, which further collaborated to the pair’s retracement back towards 1.2730-25 region.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes, "with a moderated positive tone in the 4 hours chart, as the price has recovered above an anyway flat 20 SMA, whilst technical indicators have turned north, the Momentum currently around yesterday's highs and the RSI still within neutral territory, not enough to confirm a steeper recovery."

Support levels: 1.2745 1.2705 1.2665
Resistance levels: 1.2815 1.2850 1.2890