GBP/USD Daily Forecast – Sterling Extends Higher Post-BoE Decision

Positive UK Data Keep BoE on Hold

The Bank of England kept the interest rate unchanged on Thursday after recent data showed signs that the economy is not in as bad shape as presumed in the early month.

Sterling shot higher against all of its major counterparts on the news. Several analysts think the British pound continues to remain at risk since a rate cut down the road is still on the table if economic data starts to deteriorate.

Yesterday was BoE Governor Mark Carney’s last monetary policy meeting and he will be replaced by Andrew Bailey. Investors will be watching for any comments from Bailey to assess his stance on monetary policy.

Two Cases of the Coronavirus Reported in the UK

The death toll from the Coronavirus has steadily increased throughout the week. Reuters reported on Friday that 213 people have died from the virus and some 8,000 people are known to be infected from it.

There were reports today that the NHS is treating two patients that have been tested positive for the virus. Both patients come from the same family and the NHS is working hard to prevent a further spread.

Britain Officially Leaves the EU at 23:00 GMT

After nearly four years since UK citizens voted to leave the European Union, Britain will officially depart today.

A transition period will start that will allow for trade negotiations and will last until the end of the year. During this time, the UK will still be bound to all is membership obligations and benefits.

Technical Analysis

GBP/USD rallied to 1.3109 resistance yesterday following the BoE meeting and held near the level. In early trading today, the pair is seen trying to cross over it to extend gains.

The level can be seen as a line in the sand for a near-term directional bias.

The next level of interest to the upside is 1.3171 which held the pair lower on a few attempts this month.

While the BoE decision triggered a notable rally in Sterling, GBP/USD continues to trade within the broader range that has been taken place most of the month.

Bottom Line

• The BoE gave Sterling a lift yesterday and the GBP/USD is seeing some upside follow-through in the early day on Friday.
• The UK leaves the EU although it will continue membership benefits and obligations during the transition period that will last until the end of the year.
• The Coronavirus has spread to the UK. The NHS is currently treating two patients and working hard to prevent the virus from further spreading.