GBP/USD Pound breaks psychological support

Looking at the latest report on GBP/USD, the pair succeeded in breaking below its psychological level at 1.2900 as it now trades below both the 18EMA and 50EMA. The current candlestick pattern suggests a possible falling wedge, with the previous evening star, continues to convince bears to continue selling the pair.    

In terms of MACD, weak but persistent bearish momentum, added along with a breakout confirmation below previous low may suggest continuous downward momentum for the pair. Price action is now traded back into the last zone of consolidation, with previous channel ranging near the 1.3000 and 1.2800 level. 

From the fundamental point of view, the pair was able to return to its 1.3200 high, being supported by upbeat economic data and a hawkish tone from the Bank of England (BoE) during their policy meeting in late January. Previously, market participants were concerned about a hard-Brexit scenario that would jeopardize the UK economy. However, recent data showed signs of economic recovery, as the manufacturing sector picking towards an expanding prospect.  

From BoE’s side, the central bank decided to leave the interest rate unchanged at 0.75%, while Governor Mark Carney signaled that growth is picking up as Brexit uncertainties gradually decrease, promoting business and investment to return. However, in case the  UK is unable to reach an agreement with the EU by the end of this year, it could dampen the economic situation in the country. 

BoE remained neutral towards its’ interest rate, stating that if weakening growth persists, lower rates will then be needed to support the economy. But, if the economy can recover and upward pressure on prices grow, the bank might increase the interest rate to keep inflation align with their 2% objective.