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GBP/USD fell to a new weekly low after the BoE announced its policy decision.
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Ascending trend-channel breakdown supports prospects for a further downfall.
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A recovery attempt towards the 1.2100 mark can be seen as a selling opportunity.
The GBP/USD pair extends the post-Bank of England downfall and has now retreated around 140 pips from the daily high – levels just above the 1.2200 mark. The pair maintains its heavily offered tone through the early North American session and is currently trading near the weekly low, just above the mid-1.2000s.
The BoE warned that a UK recession will begin in the fourth quarter and last all the way through next year and said that the monetary policy is not on a pre-set path. This suggests that the UK central bank would adopt a more gradual approach to raising interest rates, which, in turn, weighs heavily on the British pound.
The GBP/USD pair loses ground for the third successive day and fails to gain any respite from subdued US dollar price action. This, along with a convincing break below a three-week-old ascending trend-channel support, near the 1.2140 area, and a subsequent fall below the 1.2100 mark supports prospects for additional losses.
The negative outlook is reinforced by the fact that technical indicators on the daily chart have just started to drift into bearish territory. Hence, some follow-through weakness towards testing the intermediate support near the 1.2030-1.2025 area, en route to the 1.2000 psychological mark, now looks like a distinct possibility.
The downward trajectory may further extend towards the 1.1945-1.1940 region before the GBP/USD pair eventually breaks down to sub-1.1900 levels.
On the flip side, the 1.2100 mark now becomes immediate strong resistance. Any further recovery could be seen as a selling opportunity and is likely to remain capped near the ascending channel support breakpoint, around the 1.2140 region. The latter should now act as a key pivotal point for short-term traders.
GBP/USD 4-hour chart
Key levels to watch
GBP/USD
