The sterling retreated after a dovish BOE kept its policy unchanged, despite higher inflation.
The pair has bounced off the key support at 1.3800 on the daily chart. The break above 1.3900 suggests the short side may have unwound their positions.
However, price action has met stiff pressure at the psychological level of 1.4000, while the RSI was in the overbought territory.
The current pullback is likely to test the bulls’ resolve between 1.3800 and 1.3860. A bullish breakout would open the path towards 1.4200.