GBP/USD deflates to 1.25 on BOE’s Vlieghe’s comments

GBP/USD is revisiting the psychological support level of 1.25 this Friday morning in Asia after BOE’s Vlieghe played down the need to hike rates in response to rising inflation. 

The spot fell from the high of 1.2521 to 1.2502 and looks set to breach the 1.25 handle to the downside.

Rates need not rise in response to inflation

Cable jumped from 1.2340 to 1.2494 on Tuesday on heightened odds of BOE rate hike after the UK reported inflation at 3-year high.  However, BOE’s Vlieghe does believe rates would automatically have to rise in response to higher inflation. Vlieghe’s comments are not surprising given the policymaker is a renowned dove. Nevertheless, the Pound is losing altitude. 

Ahead in the day, Cable may reverse losses, given the US House of Representatives may not be able to pass a new healthcare bill in a rescheduled vote today. 

GBP/USD Technical Levels

A break below 1.2487 (hourly 50-MA) would expose 1.2468 (5-DMA), under which a major support is seen at 1.2418 (100-DMA). On the other hand, a breach of resistance at 1.2531 (previous day’s high) could yield a re-test of 1.2569 (Feb 24 high). A violation there would open up upside towards 1.2674 (Jan 26 high).