The BoE is expected to lower their benchmark rate by 50 bps at today's policy decision at 12:00 GMT. The central bank unanimously voted to cut rates by 100 bps at their last meeting bringing the benchmark rate to 2.00%. However, the MPC felt that a greater reduction was warranted due to the downside risks to inflation, but refrained from such an aggressive move fearing that it would sink confidence. Although, U.K. inflation stands at 4.1% and is still well above the 2.0% target, the central bank has forecasted that it could fall to more than 1% below the target this year. Therefore, a more than 50 bps point cut is a strong possibility. Recent Pound price action has nearly fulfilled technical analysis call for a test of resistance at 1.5259, which may set it up for a reversal. If the BoE signals that they may pause or end their easing policy following their decision then the Sterling could continue to move higher. However, a 100 bps rate cut and signs that the central bank is head toward a zero interest rate policy could lead to a reversal of recent gains.
I wrote yesterday that 'divergence with RSI on the daily chart also warns of a pending rally. A significant congestion zone has formed, and a strong directional move is expected soon. The weight of evidence suggests that the move will be higher.' The GBPUSD has gone through 1.50 after having tested 1.45 just yesterday. Additional upside is expected. The next resistance is former support at 1.5259. 1.5420 is calculated monthly pivot R1. Risk can be moved to 1.48.