- Attempt to resume GBP / USD from the lowest of 1.2185, capped below 1.2240 / 50
- The pound remains vulnerable to concerns over Brexit and BoE interest rates.
- The pair is testing the upper limit of the short-term downtrend channel.
The reversal of the British pound from the highs of 1.2300 on Tuesday found support at 1.2185 earlier on Thursday, although the ensuing recovery attempt remains limited midway through Wednesday’s withdrawal at 1.2240 / 50.
Vulnerable book on the misfortunes of Brexit and the BoE
GBP / USD seems unable to take advantage of the recent weakness of the dollar. to organize a solid recovery. Investors are increasingly concerned about the pound on the lack of progress in trade negotiations with the EU, which increases the chances of a Brexit without an agreement. In the current context, of the coronavirus shutdown, the consequences of a hostile exit from the Union could have serious repercussions on the British economy.
Against this backdrop, BoE Governor Andrew Bailey acknowledged on Wednesday that the bank plans to introduce negative interest rates for the first time in more than 300 years of history. These comments increased the negative pressure on the GBP.
GBP / USD capped below trend line resistance
Four-hour charts show GBP / USD is pushing downtrend resistance compared to April 30 highs, now at 1.2240 / 50, which is also a level of support prior to April 21 and lows May 7). The pair should break above to increase the bullish momentum and target the 1.2300 area (April 30 high), then 1.2340 (May 13 high).