GBP/USD – fades drop to sub 1.31 levels

GBP/USD pair is showing uncanny resilience to bearish news in early Asia, holding above 1.31 levels after quickly recovering from a drop to 1.3082 levels.

Commercial banks preparing for BOE rate cut

As per Sky news report, RBS group which includes NatWest has warned customers that may be charged for keeping money in accounts if base rates are cut below zero levels. Earlier today, news report hit the wires that BOE’s Weale, a well known hawk, now favors immediate stimulus.

However, the currency pair is stubbornly holding onto 1.31 handle despite the batch of bearish GBP news flow. Sharp drop in GBP post Brexit vote has triggered a wave of M&A deals in UK and that could be the reason behind Pound’s resilience.

GBP/USD Technical Levels

The pair was last seen trading around 1.3105 levels. A break above immediate hurdle of 1.3156 (5-DMA) could yield 1.3180 (10-DMA). A violation there could yield 1.3206 (June 30 low). On the other hand, a break below 1.31 would expose last Wednesday’s low of 1.3064, under which losses could be extended to 1.30 handle.