BoE Carney Against Further Rate Cuts and Stimulus 

The British pound was falling versus its major peers on Tuesday, ahead of BoE Governor Mark Carney’s testimony before the House of Lords Economic Committee. The pound rebounded during the speech, as the Governor stated the market is “mistaken” to be so “doom and gloom” around Brexit. He also stated that the pound fell more than 20% against the U.S. dollar since its pre-referendum levels and the inflationary impact of that rapid fall could encourage him to vote against any further rate cuts or other monetary stimulus. The domestic currency rebounded after these statements but didn’t manage to cover its previous losses in the day.

Tomorrow, the flash U.K. GDP growth data for Q3 will be released. No change is expected at the year-over-year growth, which is 2.1% since the last quarter, but on a quarterly basis the growth is predicted to slow down to 0.4% from the previous 0.7%. Next Thursday, traders will closely follow the Bank of England policy meeting and will also keep a tab on the Quarterly Inflation report, scheduled to be published together.

Following BoE Carney’s comment, the forecast for weak economic expansion in the third quarter and taking into account the strong pick-up in inflation as well – near 2-year record high at 1% in September I wouldn’t expect any changes in the current monetary policy, however I would expect the BoE Governor to underline the upbeat progress in inflation.

GBP/USD – Technical Outlook

The GBP/USD pair plunged to a fresh 2-week low and retested the 1.2100 significant psychological support level. The pair fell more than 1%, over the last six sessions, following the strong rebound on the 1.2330 resistance level which overlaps the 100-SMA on the 4-hour chart and the first resistance level of the pivot points. Also, the pair is recording the sixth negative month in a row and the only economic report worth watching these days will be both the U.K. and U.S. GDP growths tomorrow and on Friday, respectively.

The price is still establishing within a trading range roughly around the key level of 1.2200. Currently, the price is moving below the 50-SMA, on the same chart, which was a strong resistance level for the bears, while the technical indicators hold below its mid-levels. The MACD oscillator is moving below its trigger line endorsing the bearish scenario while the RSI indicator is falling. A break below the referred psychological level will slip the price to the 31-year low at the 1.1978 support level. Otherwise, if the price surpasses the 1.2330 barrier, it will open the door for the 1.2500 obstacle.

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