November 8, 2021

After BOE Market Disappointment, Where Is GBP/USD Heading?

 Monitoring the GBP/USD price movement chart, the price is seen to have displayed a plunge at the beginning of the European session (Friday) after only moving slowly and horizontally in the previous Asian session.

The price plunge on Friday was seen to continue the momentum of the price plunge on Thursday following a disappointing decision by England's central bank to keep interest rates unchanged at the latest policy meeting.

The decline also seems to be close to tracking the strongest support zone having reached at the end of September around 1.34000 thus having recorded a 2021 low.

However, entering the New York session (Friday), the price movement rose back to the SBR (support become resistance) zone of 1.35000 and remained traded below the Moving Average 50 (MA50) resistance level.

It seems that the USD failed slightly in taking advantage of the opportunity to strengthen despite the publication of the US NFP data published with a positive reading with the increase in jobs in October surpassing expectations and also the decline in the unemployment rate.

However, the possibility of profit -taking activity as well as the decline in US treasury yields for 10 years have prevented the value of the USD from continuing to strengthen.

The Pound, on the other hand, seems to be taking the opportunity and space to strengthen after being embroiled in disappointment following the Bank of England's (BOE) decision to maintain the interest rate.

If the release of US NFP data is able to stimulate the USD in recording a strengthening this week, it is expected that the 1.34000 support zone will once again be the main focus for investors assessing the reaction to the next price movement.

A more severe bearish momentum will see price movements on the GBP/USD chart able to rip through the support zone to record a new 2021 low.

First of all, the SBR zone of 1.35000 is likely to be the earliest zone to be tested if the price returns to show a jump to the higher SBR zone at the level of 1.36000.

The SBR 1.36000 zone will also be the most important aspect for investors whether the price only makes the LH (lower high) pattern or is able to give a clear signal for a change in trend.