GBP/USD: Upside looks unconvincing as focus shifts to UK data, BOE

The GBP/USD pair remains capped below the mid-point of 1.29 handle in Asia, as the investors gear up for an eventful UK docket, with the UK manufacturing and industrial production data due on the cards ahead of the BOE events.

GBP/USD: Eyes BOE decision and QIR

The spot is better offered this session, although attempts a minor-bounce from 1.2928 levels, where it found some solid support on several occasions. Moreover, stalled USD buying across the board also aided the recovery in cable. The USD index moved-off three-week highs of 99.61 to now trade around 99.50 levels, as treasury yields retreated across the curve.

The major may extend the recovery and regain 1.2950 in Europe, mainly on the back of an upside surprise delivered by the UK manufacturing and industrial figures, especially after the UK manufacturing PMI showed an unexpected rise last month.

However, it remains to be seen if the bulls survive above the last, as the BOE is likely to maintain a dovish stance, with inflation overshooting in recent times that may call for a rate cut in near-term. Although the central bank is widely expected to keep policy steady today, BOE Governor Carney will want to keep its options open, as it always does.

GBP/USD Levels to consider            

A break above 1.2961 (May 9 high) could lift the pair above 1.2990 (7-week high), beyond which a test of 1.3025 (classic R3) is imminent. Conversely, a break below 1.2931/28 (10-DMA/ daily low), leading to a subsequent break below 1.2900 (round figure) is likely to drag the pair towards testing its next support near 1.2885 (classic S2/ Fib S3).