- The GBP/USD slides despite the BoE’s hikes rates, courtesy of Bailey’s“dovish” comments.
- US Treasury yields shoot through the roof after a positive US employment report.
- GBP/USD is neutral biased, but a leg-down is on the cards, as a bearish engulfing candle pattern looms.
The British pound extended its losses after the Bank of England’s (BoE) hiked 25 basis points, but dovish comments of BoE’s Bailey in the press conference sent the GBP/USD retreating from weekly tops. At the time of writing is trading at 1.3542.
In the meantime, a better than expected US employment report send US Treasury yields higher, led by 2s and 10s, rising between twelve and ten basis points, sitting at 1.318% and 1.92%, respectively. That underpins the greenback, which pares some of its earlier losses, up 0.07% in the day, clings to 95.44.
GBP/USD Price Forecast: Technical outlook
On Friday, during the overnight session, the GBP/USD plunged under 1.3600 for fundamental reasons, dropping more than 100-pips, but the downward move was capped at the 100-day moving average (DMA). However, it forms a bearish-engulfing candle, suggesting a leg-down is on the cards, before consolidating.
The GBP/USD’s first support level to challenge will be the confluence of the 100-DMA and the 38.2% Fibo retracement, around the 1.3507-20 range. A breach of the latter might send the pair dipping towards the confluence of the 50-DMA and the 50% Fibo retracement around 1.3433-55, followed by the 61.8% Fibonacci retracement at 1.3381.