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Bank of England Holds; a Look at the GBP/USD

The Bank of England held its benchmark interest rate at the record low of 0.50% and held the asset purchase facility at £375 billion. 

img: BoE governor, Mark Carney

Markets expect a rate hike to come either late 2014 or early 2015. The prospect of a 2014 rate hike however could be deterred by lack of wage growth. We will see the BoE's forecast for wage growth next week, during its quarterly inflation report (August 13). Then the meeting minutes on Aug. 20 will also be more revealing than today's announcement of a hold. 
GBP/USD 4H Chart 8/7

(click to enlarge)

The GBP/USD thus did not shake much. It remains in the consolidation this week between 1.6809 and 1.6888. The chart shows the market is essentially bearish, since retreating from the 1.7190 high on the year. If price pushes below 1.68, it is likely to continue towards the May-June lows around 1.67. Also, if price comes up to 1.69, expect there to be sellers especially if the RSI is around 60.
If we see a break above 1.69, look for sellers in the 1.6950-1.70 area, especially when the RSI is above 70. 

The last line of defense should be around 1.7060. A break above that revives the bullish outlook, while a hold under it maintains the consolidation/bearish correction mode.