GBP/USD weaker below 1.2600 handle as BOE presser gets underway

The GBP/USD pair extended its reversal move from 1.2700 handle, 1-1/2 month highs, and tumbled below 1.2600 handle during opening statements from BoE Governor Mark Carney.

Currently trading around 1.2590-85 region, the pair came under intense selling pressure after the BoE, in the keenly watched Quarterly Inflation Report, downgraded its inflation outlook, albeit improved its GDP growth forecasts. 

On the monetary policy front, the central bank left its official interest rate unchanged at a historic low level of 0.25% and asset purchase target £435 billion.

Reduced inflation forecasts disappointed markets, which were expecting an upgrade to both growth and inflation forecasts against the backdrop of recent UK economic data that pointed to economic resilience despite of lingering concerns over Breixt.  

Investors will now closely scrutinize BoE Governor Mark Carney's comments and see if the downside risk to the economy still remains.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet notes, "Technical readings in the 4 hours chart favor an upward extension, as indicators accelerated their advances near overbought levels. Further gains beyond 1.2780 will favor an advance  up to 1.2850, the next big static resistance level."

She further writes, "The pair needs to break below 1.2645 to revert is bullish strength, at least short term, with scope then to test 1.2590."