GBP / USD drops from around 1.2260 to 1.2240 currently
While the BOE does not exactly rule out negative rates, the fall in inflationary pressures and the threat of deflation will only fuel the fires of the subject in the coming months.
The pound eases slightly after the data – not by much – but, on the contrary, expect more data like this to continue to give traders a bigger suggestion that the BOE might eventually start to really look at the negative rates if price pressures slow further.
And this will be another headwind for the pound to be considered in the medium term.
For cable, the price is now trying to stay below its 200 hour MM (blue line) while the sellers are positioning themselves from night trading.
Buyers tried to take control in the short term yesterday, but did not reach the 38.2 retracement level just below the handful of 1.2300. The battle then turned to the 200-hour MA and sellers are now finding reasons to keep the short-term bias more neutral.
The 200 hour resistance points MA @ 1.2260 and 1.2293-00 will be the key levels to monitor for any potential upside break.