The pound/dollar currency pair declined on Wednesday, closing the trading at 1.3640. Although the support level 1.3631 once again held out and was only pierced, today, at the time of writing, the pressure on the pound sterling has increased significantly, and now the pair is trading down near 1.3595, with attempts to break through one of the key technical levels 1.3600. This is quite natural since the inability to gain a foothold above another important level 1.3700 gave rise to a reversal in the opposite direction.
Another possible reason for such aggressive selling of the pound may be today's decision of the Bank of England on rates, an accompanying statement to this decision, the announcement of the volume of the bond purchase program, and the subsequent press conference of the Bank of England's Governor Andrew Bailey. Market participants probably expect a soft remark from Bailey and "dovish" signals in the accompanying statement of the Bank of England.
As for the main interest rate and the asset purchase program, the rate is projected at the same level of 0.10%, and the volume of bond purchases, according to experts, will remain the same, at £875 billion. At the same time, it cannot be ruled out that Bailey's rhetoric will not be so soft and the price dynamics of the GBP/USD pair will radically change in favor of the growth of the pound sterling.
Daily
As already noted, at this point, the pair is experiencing serious selling pressure, if it continues, the quotes risk falling to the area of 1.3528, where the daily 50 simple moving average passes. It is quite possible that near 50 MA, the pair will find strong support and at least bounce strongly from this moving average, otherwise if today's trading ends below 50 MA, the players' positions on the downside will significantly strengthen.
However, as has been repeatedly assumed, the final impact on the results of weekly trading will have labor statistics from the United States, which will be published tomorrow. To bring back the bullish sentiment on GBP/USD, it is necessary to close today's trading above the red line of the Tenkan Ichimoku indicator, which passes at 1.3669. In this case, and the case of weak US labor reports, the pair is once again able to test the strong resistance zone of 1.3700-1.3757 for a breakdown. A true breakout (which implies a consolidation) of 1.3757 will clearly indicate that the sterling is ready to continue its strengthening against the US dollar.
H4
The current and rather strong pressure on the pound sterling is particularly seen in the four-hour timeframe. At the end of this article, the pair is testing the orange 200 exponential moving average for a breakdown, and if successful, it risks falling lower to the support area of 1.3518. It is also worth noting that before testing for a breakdown of the 200 EMA, two consecutive candles closed under the support level of 1.3608. If the third candle closes below this mark, then on the pullback to the price zone 1.3600-1.3630, it is worth considering the sale of the sterling. More precisely, it would be worth it, if not for today's events related to the Bank of England. In such a situation, it is difficult to give unambiguous forecasts, anything can happen.
The same applies on the following day, upon the publication of the data on the US labor market. Nevertheless, in my opinion, the preference should be given to selling GBP/USD. Recently, the market situation has changed dramatically in favor of strengthening the US dollar, which should be confirmed by tomorrow's positive labor reports from the US.
