Sterling Weakens Amid BoE Rate Cut Speculations

The British pound continued to decline at the start of the week following a brief consolidation on Friday.

Current market bets indicate a 60% chance of a rate cut by the Bank of England at Thursday’s policy meeting, putting pressure on sterling.

The technical outlook on the daily chart has deteriorated further after Monday’s decline broke below the 1.2830 pivot (the 50% retracement of the 1.2615/1.3044 range and daily Kijun-sen). A daily close below this level would confirm a fresh negative signal.

Key targets are now at 1.2779 (the 61.8% Fibonacci retracement) and 1.2741 (the top of the daily Ichimoku cloud), with downward-trending daily indicators suggesting potential for further declines. However, a limited correction is anticipated in the coming sessions as the stochastic is deeply oversold.

Any upticks should be capped under the 1.2850/70 resistance levels, offering better selling opportunities.

Res: 1.2830; 1.2880; 1.2910; 1.2943
Sup: 1.2800; 1.2779; 1.2741; 1.2716