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Elliott Wave: GBPUSD falls post-BoE

The GBP/USD pair extended post-BoE downside move and tumbled to one-week low near mid-1.2800s during Governor Mark Carney's post-meeting press conference.

Carney stated that the current inflation trajectory was primarily led by sterling depreciation and reiterated that current monetary policy was appropriate. He also showed concerns about weak wage growth, which were partly led by poor productivity, while there was evidence that some firms are hesitating to bring in higher wage costs during uncertainty around Brexit.
Carney's comments clearly suggested that the British economic slowdown in the first quarter of 2017 was not primarily led by Brexit worries and justified central bank's downward revision of GDP growth forecast for 2017.

Earlier, the BoE's Monetery Committee voted 7-1 to leave interest rates unchanged at record low level of 0.25% and there was a unanimous vote to keep government bond purchase program unchanged at £435 billion. The dovish tilt attracted some fresh selling pressure across GBP cross, with the pair reversing majority of its gains recorded over the past couple of weeks.

In terms of technical analysis, according to my updated preferred Elliott Wave count, GBPUSD is in a downside 4th wave that is expected to test 1.2780 zone on the lower trendline of the short term upside price channel on the H4 chart. As long as this support holds in the coming trading sessions, GBPUSD is anticipated to rebounce for wave v in C in (4).

In contrast, in case there’s a strong break below the support of 1.2780, the downside correction will lead to 1.2620 before any strong rebounce or continued declines.

I hope to enter a buy order when 1.2780 is reached and RSI (14) moves below 30 (oversold area). Be patient!

By Jack Huyn

Please be informed that information I provide is for educational purposes only and not intended as investment advice. Information and analysis above are derived from utilising methods believed to be reliable, but I cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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