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GBP/USD Price Analysis: Consolidates above 1.2700 ahead of BoE decision

  • GBP/USD moves lower on Thursday, breaking a three-day winning streak to the weekly high.
  • USD finds support in rising US bond yields and puts pressure on the pair.
  • The decline lacks follow-through as traders wait for the BoE before opening new directional positions.

The GBP/USD pair trades with a slightly negative bias at the start of the European session on Thursday and moves further away from the weekly high, around the 1.2740 area touched the previous day. However, the pair remains above the 1.2700 level, as traders await the crucial monetary policy decision from the Bank of England (BoE) before opening new directional positions.

Ahead of the central bank risk event, the US Dollar (USD) attracts some buyers following a good rally in US Treasury yields, which turns out to be a key factor acting as a wind against for the GBP/USD pair. However, expectations that the Federal Reserve (Fed) will cut interest rates twice this year limit any significant gains for the dollar. Additionally, reduced bets that the BoE will ease monetary policy in the coming months, following higher-than-expected service sector inflation in May, should support the British Pound (GBP) and lend support to the pair.

From a technical perspective, GBP/USD remains comfortably above the 100- and 200-day SMA, favoring bullish traders. That said, the mixed oscillators on the daily chart and the recent repeated failures to find acceptance above the round 1.2800 level warrant some caution before positioning for any significant upside ahead of the UK national election on July 4. However, any further decline will likely find decent support near the 1.2755-1.2750 horizontal zone, below which the pair could accelerate the decline towards the 1.2715-1.2710 region.

Some follow-through selling below the 1.2690-1.2685 region will suggest that the recent strong rally from the yearly low hit in April has come to an end and will expose support at the 100-day SMA, currently situated near the 1.2640 area. -1.2635. The GBP/USD pair could eventually weaken further below the 1.2600 level and aim to challenge the very important 200-day SMA, around the 1.2560-1.2555 area.

On the upside, bulls need to wait for sustained strength above the 1.2800 level before positioning for a move back towards the more than three-month high, around the 1.2860 area touched last Wednesday. The subsequent move higher should allow the GBP/USD pair to surpass the yearly peak, around the 1.2900 neighborhood, and rise further towards the 1.2950 hurdle before aiming to reclaim the psychological level of 1.3000 for the first time since July 2023. .

GBP/USD daily chart

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GBP/USD additional technical levels

Summary
Latest price today 1.2715
Today’s daily change -0.0005
Daily change % today -0.04
Today’s daily opening 1,272
Trends
SMA20 Journal 1.2743
SMA50 Daily 1.2618
SMA100 Journal 1,264
SMA200 Journal 1.2554
Levels
Previous Daily High 1,274
Previous Daily Low 1.27
Previous Weekly High 1,286
Previous Weekly Low 1.2657
Previous Monthly High 1.2801
Previous Monthly Low 1.2446
Daily Fibonacci 38.2% 1.2725
Daily Fibonacci 61.8% 1.2716
Daily Pivot Point S1 1.27
Daily Pivot Point S2 1,268
Daily Pivot Point S3 1,266
Daily Pivot Point R1 1,274
Daily Pivot Point R2 1,276
Daily Pivot Point R3 1,278

Source: Fx Street

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