GBP/USD Price Analysis: Edges lower yet remains above 1.2800

• GBP/USD drops 0.32% as BoE cuts rates to 5.25% in a tight 5-4 vote.
• Technical outlook suggests potential rebound, forming a 'hammer' pattern.
• Key resistance levels at 1.2888, 1.2900, and 1.2937; support levels at 1.2786, 1.2750, and 1.2700.

The Pound Sterling is under pressure in early trading during the North American session, dropping some 0.12% after the Bank of England (BoE) cut interest rates to 5.25% in a 5-4 tight vote split. Following the decision, the GBP/USD fell to its lowest level of 1.2750, yet has recovered somewhat, trimming some of its losses. The pair exchanges hands at 1.2837 at the time of writing.

GBP/USD Price Analysis: Technical outlook

Following the BoE’s decision, the GBP/USD seems to form a ‘hammer’ preceded by a 2.20% fall, which could open the door to climbing above the 1.2900 figure and re-testing the 1.3000 figure. Although BoE Governor Bailey and Co. reduced borrowing costs, the policy remains restrictive, as they upward revised their inflation expectations to 2.25%.

If GBP/USD clears the current week high at 1.2888, that could exacerbate a rally to 1.2900, followed by the latest pivot high at 1.2937, the July 24 high. A breach of the latter will expose 1.3000.

For a bearish continuation, sellers must push prices and achieve a daily close below the 50-day moving average (DMA) at 1.2786. Once surpassed, the next support would be the August 1 low of 1.2750, followed by 1.2700 and the 100-DMA at 1.2683.

GBP/USD Price Action – Daily Chart