GBP/USD Outlook: Cable Continues To Travel South After BoE Disappointed Expectations For Rate Hike

Technical analysis of Forex market

Cable remains firmly in red and extends weakness below the 1.3500 mark, following a massive fall on Thursday (down 1.35%, the biggest one-day drop since 18 Mar 2020), sparked by BoE disappointment.

The Bank of England kept rates unchanged on Thursday although many expected the British central bank to be the first among major world central banks to start hiking after the pandemic, pricing in a 0.15% rise in November’s policy meeting.

The decision strongly soured the sentiment, sending the pound to a five-week low that significantly weakened the near-term structure.

Fresh bears eye key support at 1.3411 (2021 low, posted on Sep 29) to fully retrace 1.3411/1.3834 recovery leg and signal continuation of the larger downtrend from 1.4249 (2021 high).

Break of 1.3411 pivots could extend bears towards 1.3164/56 (Fibo 38.2% of 1.1409/1.4249, Mar2020/Jun2021 rally/ base of thick weekly cloud) that would unmask psychological 1.30 support.

Thursday’s massive bearish candle weighs heavily, as bearish momentum continues to strengthen on the daily chart, but oversold conditions suggest bears may face headwinds on approach to 1.3411, however, firm bearish signals from the weekly chart suggest that bears remain in play and corrective upticks would offer better selling opportunities.

Immediate resistance lays at 1.3511 (session high / broken Fibo 76.4% of 1.3411/1.3834), followed by a more significant 1.3570 zones (former higher base / broken Fibo 61.8%) which should cap the upticks and keep bears intact.

Res: 1.3511, 1.3543, 1.3570, 1.3605.
Sup: 1.3433, 1.3411, 1.3312, 1.3280.