GBP/USD has traveled from range-high to range-low in a six-week 1000 pip move since the start of the year.
With the 130 pip drop today following the MPC minutes, the RSI is at its lowest since June and the pair is well-below the lower Bollinger band. Support from the June low is at 1.5269 followed by the Jan 2012 low of 1.5235. There is strong demand ahead of both of these levels.
On the topside breakout, there was a spike reversal and the same can’t be ruled out on the bottom. Overall, the chart reminds me of the 2008-2009 USD/CAD chart which had a similar false breakout and then an extended fall.
A Reuters poll released today shows a median estimate of a 51% chance of more BOE bond buying this year compared to 43% in a poll earlier in the month. Economists also see a 35% chance of more bond buying at the March meeting.