GBP/USD extends post-BOE upsurge, now around mid-1.4000s

The GBP/USD pair built on its post-BOE upsurge and was seen building on the bullish momentum further beyond the key 1.40 psychological mark. 

The pair caught some strong bids and spiked to a three-day high following a hawkish hold from BOE, saying that rates need to rise earlier and faster than anticipated in November report. 

The post-BOE price action now seems to suggest that the market is now pricing in close to 2 rate hikes over next 12 months and remained supportive of the follow-through buying interest. 

As Mario Blascak, European Chief Analyst at FXStreet writes: "The hawkish turn of the Bank of England is now making the rate increase in May more probable despite the Bank of England Governor Carney voicing Brexit related uncertainty once again."

Meanwhile, possibilities of some short-term trading stops being triggered, on a move above the 1.40 handle, might have further aggravated the short-covering move and seems to another factor behind the pair’s latest leg of upsurge over the past hour or so.

Technical levels to watch

Immediate resistance is pegged near 1.4070 level, above which the rally could get extended towards reclaiming the 1.4100 handle. On the flip side, any meaningful retracement should now find strong support near the 1.4000 handle and any subsequent retracement is likely to be limited by 1.3970 horizontal support.