GBP/USD Forecast: Recovery modest as all eyes turn to the BOE

GBP/USD Current price: 1.3960

• The US Federal Reserve ultra-loose policy underpinned GBP/USD.
• The Bank of England will announce its monetary policy decision this Thursday.
• GBP/USD advanced post-Fed, but additional gains are still unclear.

The GBP/USD pair peaked at 1.3929 early on Wednesday but quickly retreated below the 1.3900 threshold ahead of the US central bank announcement to turn red on a daily basis. The UK calendar had nothing to offer, but concerns surrounding the side effects of the AstraZeneca vaccine continue to undermine demand for the pound. Nevertheless, the US Federal Reserve sent the greenback down across the board after maintaining the current monetary policy on hold and anticipating a long period of ultra-loose support to the economy. GBP/USD jumped to a fresh weekly high at 1.3963.

This Thursday, the Bank of England is having a monetary policy meeting. UK policymakers are widely anticipated to leave rates and the Asset Purchase Facility unchanged and pour cold water on chances of negative rates. There won’t be a press conference this time, neither updates on growth and inflation forecasts. In general, the market expects an optimistic central bank amid progress in curbing contagions through massive inoculation.

GBP/USD short-term technical outlook

The GBP/USD pair trades near the mentioned daily high, but its bullish potential remains limited. The 4-hour chart shows that the pair struggles to advance beyond a mildly bearish 100 SMA but firmed up above the 20 and 200 SMA, both still directionless. Technical indicators are crossing their midlines into positive territory but so far remain at neutral levels. Chances are on the upside as long as the pair holds above the 1.3900 threshold, with room to extend gains beyond the 1.4000 figure.

Support levels: 1.3900 1.3865 1.3820

Resistance levels: 1.3965 1.4010 1.4050

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