Technical Bias: Bullish
- EURGBP touches 1.5525 in intraday trade, the pair’s highest since late-February.
- Bank of England keeps interest rates and asset purchase facility unchanged at 0.5% and £375 billion, respectively.
The GBPUSD turned positive on Monday after a choppy European session, climbing to its highest level in nearly three months following a decision by the Bank of England to keep interest rates unchanged.
The GBPUSD climbed to a daily high of 1.5525, advancing 0.4 percent to its highest level in nearly 11 weeks. The 1-hour time frame shows bullish upside on the MACD and the RSI, although the latter suggests the pair is slightly overbought. The RSI backs off overbought levels in our daily analysis.
Cable faces immediate support at the psychological 1.5500 region, which is also the high from April 29. On the upside, resistance is likely found at 1.5572.
BOE Keeps Interest Rates Unchanged
As expected, the Bank of England made no changes to monetary policy on Monday, as policymakers held interest rates at 0.5 percent and the asset purchase facility at £375 billion for another month. The decision, which is usually announced each month on a Thursday, was delayed due to the federal election.
With inflation at zero, the Monetary Policy Committee has plenty of scope in keeping interest rates record lows. The BOE targets inflation at 2 percent.
The minutes of today’s meetings will be released in two weeks’ time.
UK General Election Supports Cable
The Conservative government of David Cameron secured a majority in last week’s elections. It was the first Conservative majority since 1992, defying expectations for a much more narrowly split result. Polls leading up to the May 7 vote showed a deadlock between Labour and the Conservatives, with UKIP a distant third. The actual results showed a 51 percent majority for the Conservatives, with Labour at a distant second with 36 percent. UKIP finished near the bottom with only one seat in the British parliament.