GBP/USD rebounds swiftly, rallies to fresh weekly tops post-BoE

• GBP/USD quickly recovered the post-BoE fall to the 1.3855 area and refreshed weekly tops.
• The BoE’s upbeat economic forecasts assisted the major to attract dip-buying at lower levels.
• Uncertainty stemming from the Scottish election might hold bulls from placing aggressive bets.

The GBP/USD pair reversed a knee-jerk slide to the 1.3855 region and rallied around 85 pips after the Bank of England announced its monetary policy decision.

As was widely anticipated, the BoE's MPC voted unanimously to leaves the benchmark interest rate and Asset Purchase Facility unchanged at 0.10% and £875 billion, respectively. The decision was on expected lines, though the lack of clarity on future tapering plans exerted some downward pressure on the British pound.

The negative factor, however, was offset by more hawkish economic forecasts, which helped limit the downside. The UK central bank now anticipates GDP growth of 7.25% in 2021 and 5.75% in 2022 and sees 2021 inflation averaging 2.5%. The BoE also slowed the pace of weekly bond-buying and expects purchases to end around late 2021.

Apart from this, the prevalent selling bias surrounding the US dollar assisted the GBP/USD pair to attract some dip-buying and jump to fresh weekly tops, around the 1.3940 region in the last hour. With the key central bank risk out of the way, the potential risk stemming from the Scottish election held bulls from placing fresh bets.

Hence, it will be prudent to wait for some strong follow-through buying before traders start positioning for any further near-term appreciating move beyond the key 1.4000 psychological mark.

Technical levels to watch