GBP/USD battle resides between the 100-hour moving average and the 100-day moving average ahead of the BOE
The near-term chart continues to show that sellers remain in near-term control as price action is keeping under both key hourly moving averages. Notably, sellers have been leaning on the 100-hour MA (red line) to limit upside in the pair since the run lower on Tuesday.
A break back above that will see buyers start to wrestle some near-term control with the 200-hour MA (blue line) @ 1.2631 one to watch if we see a climb higher.
Meanwhile, keep below the 100-hour MA @ 1.2567 and sellers will maintain the more bearish near-term bias but more work needs to be done.
For now, any real downside momentum is also limited by support from the daily chart:
The 100-day MA (red line) @ 1.2521 currently remains a key obstacle for sellers to try and firmly break under with bids around the 1.2500 level also making it tough for any extended push to the downside to materialise for now.
As such, the battle in the pair now resides in between the 100-hour moving average and the 100-day moving average as the attention turns towards the BOE.
The central bank is likely to expand its QE programme by £100 billion and that should allow purchases to continue through to August at the very least. That is the expectation of the market now and should largely be baked into price action.
In that sense, such a move should keep sterling supported since the BOE is still opening the stimulus tap to bolster the economy. An increase of £150 billion may perhaps even give sterling a bit more of a nudge higher as it reaffirms the BOE's conviction.
I don't see much downside risk for the pound besides some "buying the rumour, selling the fact" play but that is tough to consider amid recent price action and also the fact that this isn't quite some major monetary policy stance pivot.
But again, just pay attention to the key technical levels above. Those will tell more of the story and the next trade will be to try and go with the break in momentum for cable.
