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GBP/USD breaks below 1.3500 handle

5/9/2018, 2:01:48 PMMarket Analysis
GBP/USD breaks below 1.3500 handle

The GBP/USD is trading at around 1.3500 down 0.5% in Tuesday’s trading as the monetary policy divergence between the US Federal Reserve Bank and the Bank of England push Sterling lower 

The US dollar saw a fresh buying wave after a four-day consolidation on the US Dollar Index sending the GBP/USD below the 1.3500 psychological level for the second time in the recent bear trend. 

Greenback was boosted by hawkish comments from Jerome Powell, the Federal Reserve’s chairman, who said that “some investors and institutions may not be well positioned for anticipated US interest rate hikes.” He spoke at an event organized by the Swiss National Bank and the International Monetary Fund in Zurich earlier in the European session. 

On the other hand, the British pound is very weak as investors are expecting the Bank of England to leave rates on hold at the next BoE meeting this Thursday. The recent macroeconomic data in the UK has disappointed the market's expectations and analysts are now forecasting that the rate hike, which was initially expected in April will be pushed back in November. 

Bears would be eyeing for a decisive break through the 1.3500 mark, below which the pair is likely to accelerate the fall further towards the 1.3465-60 support area. On the upside, momentum back above the 1.3540 region (200-day SMA) might continue to confront some fresh supply near the 1.3590-1.3600 area. Any subsequent up-move beyond the mentioned hurdle is likely to be capped at an important support break-point, now turned resistance, near mid-1.3600s.” wrote FXStreet’s own Haresh Mengani.