Bank of England as an excuse to start correction in pair GBPUSD

The last days have clearly shown that so far the downside potential in the GBPUSD pair is limited by the support level of 1.3500. The pair is consolidating at the bottom in anticipation of a decision by the Bank of England. In our opinion, it is the meeting of the Central Bank on Thursday and its results that will decide whether the pound will go below 1.35 or whether a correction wave will begin against the fixation of profits and the opening of long positions from extremely attractive current entry points.

Recall that the current "drain" of the pound in pairing with the dollar is not only a merit of the overall strengthening of the dollar in the foreign exchange market, but in many respects the merit of the Bank of England, namely the statements of its head Mark Carney that the rate in May is likely to be unchanged.

In this light, the current results of the meeting of the Central Bank, in our opinion, practically do not pose a threat to the pound. Potentially "pigeon" statements have already been worked out and taken into account by the market (in the form of price reduction from 1.4250 to 1.35). So not raising rates and not the most convincing rhetoric on the idea should be ignored by the market, since they are already incorporated in the current price. Accordingly, the remaining options - neutral and moderately aggressive will definitely play into the hands of pound buyers. Recall that sellers now literally keep their hands on the button "close the position" with the goal of fixing profits for as yet favorable prices. Any serious growth of the pound, especially if it takes place against the backdrop of the Bank of England's positive rhetoric, will lead to a massive closure of sales, which inevitably provokes the growth of the GBPUSD.

The technical picture also contributes to this scenario: oscillators are deployed in the zone of severe oversold, and trend indicators are in extreme zones, indicating that the current trend is outdated and at least needs correction in order to discharge indicators.

Thus, we believe that Thursday may be the day of the start of a full-fledged correction in the pair GBPUSD. Reason - the outcome of the meeting of the Bank of England (by default they are expected to be neutral, that is, the rate will not change, and the statements will be restrained and cautious). So buying from the current is a promising transaction. With very good potential (pair growth of 400-500 points is quite realistic) and quite insignificant for such profits risks (stops below 1.3450).