The greenback was trading broadly higher and the GBPUSD pair was down 0.35% during the London session on Thursday, seen hovering around 1.3080.
Later today, the UK construction PMI is projected to weaken marginally to 52.8 from 53.1 previously. Moreover, yesterday’s manufacturing PMI also slowed from 54.3 to 54.0 and tomorrow’s services sector is seen declining from 55.1 to 54.7.
More importantly, the Bank of England is expected to raise rates today and the main refinancing rate will therefore move from 0.50% to 0.75%. 7 MPC members are seen voting for this step, while 2 governors will probably vote for an unchanged rate. The pound has dropped in the recent weeks, despite expectations of rising rates and therefore the following statement will be important. Should it sound a bit more hawkish, sterling could rocket higher.
Trading on the GBPUSD pair is still dominated by the very strong bearish trend line, which is currently around 1.3170. If this resistance falls, the bearish trend would be cancelled, with the next target at 1.33.
On the downside, the key level to watch is the 1.30 barrier, where the current cycle lows are seen as well as the psychological mark. There is a bullish divergence between price and the RSI indicator, which could prompt some short covering rally.
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