GBP/USD trades close to 1.24 after the BOE, ahead of updates on the lockdown

GBP/USD is trading closer to 1.24 after the BOE left the door open to more support to the economy and as PM Johnson is preparing his announcement on easing the lockdown. The UK is having a day off and US jobs figures are eyed.

From a technical perspective, the 1.2420 region might continue to act as an immediate resistance, above which a bout of short-covering has the potential to lift the pair further towards the key 1.2500 psychological mark. Some follow-through buying should assist the pair to make a fresh attempt towards reclaiming the 1.2600 round-figure mark. The momentum could further get extended back towards challenging 200-day SMA, around the 1.2640-45 region. A convincing break through will now be seen as a fresh trigger for bullish traders and set the stage for a further near-term appreciating move.

On the flip side, immediate support is pegged near the 1.2350 region and is followed by the 1.2300-1.2290 region. Failure to defend the mentioned support levels will add credence to the bearish double-top formation on the daily chart and prompt some technical selling. The pair then might accelerate the slide towards intermediate support near the 1.2245 region before eventually dropping to test the 1.2200 mark en-route April monthly swing lows support near the 1.2165 level.

The GBP/USD pair had some good two-way price swings in a relatively volatile trading action on Thursday and finally settled nearly unchanged for the day. The British pound strengthened a bit after the Bank of England (BoE) left its interest rates and Asset Purchase Facility unchanged at 0.10% and £645 billion, respectively. Meanwhile, 2 BoE MPC members voted for £100 billion increase to the QE program, though was largely shrugged off by investors’ amid the latest optimism over the easing of lockdown restrictions in some parts of the world.

Adding to this, upbeat Chinese trade balance figures fueled speculations that the world’s second-largest economy could recover quicker than anticipated from the coronavirus-induced lockdowns. This, in turn, boosted investors’ confidence and weighed on the USD’s perceived safe-haven status against its British counterpart. Despite the supporting factors, the pair failed to capitalize on the uptick, instead witnessed a modest intraday pullback after the BoE Governor Andrew Bailey indicated an extension of the quantitative easing – perhaps as early as in June.

The pair subsequently dropped to 2-1/2 week lows before staging a goodish intraday bounce on the back of some aggressive USD selling. Expectations that worse-than-anticipated economic downturn could force the Fed push rates below zero. This was evident from a steep decline in the US Treasury bond yields, which further took its toll on the greenback and assisted the pair to rally over 100 pips from the daily swing low.

The USD remained on the defensive and provided an additional lift to the major through the Asian session on Friday. The uptick, however, lacked any strong bullish conviction as investors refrained from placing fresh bets, rather preferred to wait on the sidelines ahead of the release of the closely watched US monthly employment details. The NFP report is expected to show that the US shed a record 22 million jobs in April and the unemployment rate spiked to 14% from 4.4% previous.

Source from https://www.fxstreet.com/currencies/gbpusd

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