Sterling rallied sharply on the news, well above the 23.6% BREXIT retracement level at 1.3317 which had previously acted as key resistance.
Whilst longs were given another opportunity to get long at 1.3292 intraday (slightly in the money at the time of writing), I feel that we are at a key inflexion point and the downside risk prevails unless we see a consecutive daily close above 1.3317
Carney may not have announced a rate cut today, but the BoE is now more likely than ever to cut rates next month, by a full 0.5%. Markets trade on expectations, not the past, and money may still be made on the short side as traders fade today's surprise (short covering). A consecutive daily close above 1.3317 invalidates this idea and provides a potentially to advance towards the next key Fibonacci level at 1.3642
In this scenario upside momentum in GBP should prevail in the short-term, targeting 1.3642 around the 38.2% Fibonacci level. If this fails to transpire, then expect further chop in the coming sessions maintaining the current downside bias.
I remain negative in my fundamental view of GBP and will provide updates of where I feel technically the pound is vulnerable and potentially a great short.
Whilst the danger of a short squeeze is becoming greater with sentiment and positioning so negative, the pound remains suppressed below 1.3317 for the time being.
In the event that the BoE does not cut rates in August, then there would be a sharp correction. You may be best advised to cover shorts ahead of the meeting and trade after the event if a cut is in fact announced as expected.
The above is based on technicals, overlaying my bearish fundamental bias for the pound. 50bps rate cut likely next month will only accelerate this down move.