Morning outlook - GBP/USD surges by 124 pips amid BoE decision
- A decision of the Bank of England not to change the Official Bank Rate was expected to lead to sharp depreciation of the Pound.
- This assumption was based not only on historical market reaction on similar fundamental event but also technical analysis. Namely, on a daily chart prior to release the currency pair hit the upper edge of a long-term rising wedge and, in essence, had to make a rebound.
- Contrary to expectations, bulls pushed the pair in the opposite direction. As a result, the Pound has appreciated against the Greenback by 1.40% just in couple of hours, in the process leaving the dominant formation.
- Now the pair faces only two barriers on its way, i.e. the weekly and monthly R2 at 1.3425 and 1.3485. Thus, a short-term rebound might follow. But, generally, the pair is expected to continue to move to the top.
