GBP/USD extends post-BoE sell-off, tumbles to lows near 1.2550 level

The GBP/USD pair extended BoE's inflation report-led sharp reversal and tumbled around 150-pips from multi-week highs touched earlier today.

Currently trading around 1.2550 region, the pair accelerated the downslide as markets seemed unimpressed after BoE downgraded its inflation outlook saying that the current up-tick has been solely driven by weakness in the British Pound. Meanwhile, the central bank upgraded its growth projection, which reinforced recent economic data reflecting resilience despite of Brexit worries. 

Meanwhile, comments from BoE Governor Mark Carney that inflation expectations remain well anchored and that any overshoot of inflation can only be temporary added on to the selling pressure surrounding the British Pound. Carney further added that stronger economic projections do not mean Brexit is without consequence and that there was scope for further easing of the monetary policy if spending growth slows more abruptly than expected.

Downward revision of inflation outlook, coupled with dovish comments from Carney continued exerting selling pressure, with the pair now reversed all of its gains recorded in the previous session.

Technical levels to watch

A follow through selling pressure is likely to drag the pair towards 100-day SMA support near 1.2490-85 region before the pair eventually drops back to 50-day SMA support near 1.2420-15 region.

On the flip side, any recovery attempts might now confront immediate resistance near 1.2580 level, which is closely followed by 1.2600 round figure mark. Any subsequent moves above 1.2600 handle might now be capped at 1.2645-50 region, which if cleared would negate any near-term bearish bias.