GBP/USD rebounds sharply from weekly lows, jumps to session tops post-BoE

• The BoE MPC votes 7-2 to leave interest rates unchanged.
• GBP/USD rallies around 80 pips following the announcement.
• Fears of a no-deal Brexit might keep a lid on ay strong gains.

The GBP/USD pair reversed a knee-jerk slide to weekly lows and jumped back above the 1.3100 handle, refreshing session tops post-BoE announcement.

Having failed to capitalize on its early European session uptick, the pair met with some fresh supply near the 1.3125-30 region following the disappointing release of November UK monthly retail sales figures.

The intraday pullback extended further and dragged the pair back to last week’s swing low, around mid-1.3000s, albeit witnessed a dramatic turnaround after a hawkish tilt from the BoE policy decision.

At its December monetary policy meeting held this Thursday, the BoE MPC voted 7-2 in favour of holding interest rates unchanged at 0.75% as compared to a unanimous decision expected.

The British pound jumped across the board immediately after the announcement and lifted the pair to a fresh intraday high level of 1.3132, reversing the previous session’s modest weakness.

The upside, however, is likely to remain capped amid renewed fears that the UK will crash out of the European Union without a deal at the end of the transition period on December 31, 2020.

It is worth recalling that no-deal Brexit concerns resurfaced after the UK Prime Minister Boris Johnson was said to seek to pass legislation that will make it illegal to extend the transition period.

Technical levels to watch