Over the last couple of days, the GBP/USD has rallied well after finding some support around 1.5650 and 1.57 which has been able to temporarily halt the strong fall. Over the last month, the Cable has steadily slid lower below 1.57 from near 1.64. For the last couple of weeks, the GBP/USD had been doing its best to rally and push back off the support level at 1.57, however during last week it was met with strong supply which eventually pushed it to its lowest levels since August last year (touching 1.5630). Over the last few weeks it has experienced a rollercoaster ride back and forth between two key levels at 1.57 and 1.5850.
Over the last month or so, the Cable has met excess supply around 1.63 and 1.6150 as both of these levels have become strong resistance levels forcing the price away and back below 1.60. This fall has continued down to the key 1.5850 level which temporarily halted the decline for a few days only to see the Cable continue lower. Over the bigger picture, the Cable has now traded within a wide range of 6 cents over the last four months or so, as these levels continue to play a role every time the price approaches one of them, as you can see in the daily chart below. The recent key level at 1.57 seems to have taken its time to hold up and continue to provide support however its persistence seems to have paid off.
Also over the last month or so, the Cable has displayed interesting price action as it has firmly established some key levels 150 pips from each other. These levels are at 1.63, 1.6150, 1.60, 1.5850 and most recently 1.57. Over the course of the last few weeks, the Cable has fallen sharply from levels not seen for about 15 months up near 1.64.
Last week, there were no surprises from the BOE, as it maintained present levels for QE and the benchmark interest rate. All eyes were on the Bank of England, which set its interest rate and Asset Purchase Facility (QE) levels. As was widely expected, the central bank continued with more of the same. The benchmark interest rate was pegged at 0.50%, while QE remains at 375 billion pounds each month. The ECB also kept its current rate at 0.75%. Other UK releases last week were solid. Manufacturing Production rose a robust 1.6%, easily beating the estimate of 0.7%.
(Daily chart / 4 hourly chart below)