GBP/USD slides further on BOE’s neutral stance

UK 5-year breakeven rate shows inflation expectations are at the highest level in three years, despite which the Bank of England (BOE) remained neutral. 

Thus, the GBP/USD pair dropped to a low of 1.2518 on Thursday and extended losses to a low of 1.2511 in the Asian session today. 

Bearish engulfing pattern 

Thursday’s dropped engulfed Wednesday’s bullish move. The bullish engulfing candlestick suggests a trend reversal which goes down well with the fact that the bulls are likely to stay on the sidelines ahead of the next month’s article 50 trigger date. 

Eyes US non-farm payrolls 

The markets are betting on a strong payrolls number following the release of a super strong ADP report earlier this week. It remains to be seen if the strong number is read as positive or a sign of slack in the labor market. Moreover, the payrolls figure could take a back seat to the wage growth figures. 

GBP/USD Technical Levels

A break below the downward sloping 1100-DMA of 1.2487 would open doors for a sell-off to 1.2436 (50-DMA), under which the psychological figure of 1.24 could offer support. On the other hand, a break above 1.2535 (session high) could yield a re-test of 1.2563 (10-DMA). A violation there would expose 1.26 (zero figure).