GBP/USD crashes to 1.0530 area after BoE announcement

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  • Bank of England announces temporary purchase of bonds.
  • The pound tumbled after a brief rally.
  • GBP/USD falls from the 1.0840 zone to the 1.0530 zone.

Volatility in pound crosses spiked following the Bank of England’s announcement that it will buy long-term bonds. The GBP/USD once traded at 1.0839, only to later plunge to 1.0536marking a new low in two days.

The collapse in the prices of British bonds and in the pound itself, led the Bank of England to announce on Wednesday that it will buy long-term bonds temporarily and to affirm that it will not hesitate to raise the interest rate as necessary to make it inflation returns to the 2% target.

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After this, the pound initially reacted upward, but then had a sharp fall. The impact was also felt in the global equity markets that reacted with increases, which have moderated. In turn, US Treasury bond yields fell. The 10-year rate went from being above 4% for the first time in more than a decade to falling to 3.88%. The British benchmark fell from 4.55% to 4.02%, before rising to 4.25%.

GBP/USD is trading around 1.0580, down for the day and eyeing the 1.0450 zone and below already at Monday’s low of 1.0316. A firm return above 1.0900 would relieve negative pressure.

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For its part, the EUR/GBP, which fell to 0.8838 after the BoE announcement, is at 0.9030. While the GBP/JPY jumped to 156.65 before falling to 152.50.

The impact of the BoE has shown to be more lasting on stocks than on the British pound so far. Volatility remains high and is expected to continue that way.

Technical levels

GBP/USD

Panorama
Last Price Today 1.0573
Today’s Daily Change -0.0159
Today’s Daily Change % -1.48
Today’s Daily Opening 1.0732
Trends
20 Daily SMA 1.1378
50 Daily SMA 1.1758
100 Daily SMA 1.2013
200 Daily SMA 1.2628
levels
Previous Daily High 1.0838
Previous Daily Minimum 1.0655
Previous Maximum Weekly 1.1461
Previous Weekly Minimum 1,084
Monthly Prior Maximum 1.2294
Previous Monthly Minimum 1.1599
Daily Fibonacci 38.2% 1.0768
Daily Fibonacci 61.8% 1.0725
Daily Pivot Point S1 1.0645
Daily Pivot Point S2 1.0559
Daily Pivot Point S3 1.0462
Daily Pivot Point R1 1.0829
Daily Pivot Point R2 1.0925
Daily Pivot Point R3 1.1012

Source: Fx Street

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