The pair is trading near to its two year low around the 1.2100 region, on the back of a not so anticipated hawkish stance from the US Fed and its denial to further cuts .Fed Chair Jerome Powell has said that the outlook remains favorable for the US economy and this rate cut is a merely an "insurance" against risks to the outlook. The focus now shifts to the Bank of England which announces its rate decision and releases its Quarterly Inflation Report (QIR) later today. The BOE is set to leave its policy unchanged but may drop its intention to raise interest rates, which it shown in its last meeting. But, the cable currency may pick up bids if the BOE reiterates the message delivered in May. The central bank, however, has little room to sound hawkish with the ever circling Brexit risks. That said, with the GBP already at 2.5-year lows, the BOE would want to avoid sounding too dovish, as that could yield a bigger slide in the British currency, leading to a sharp rise in imported inflation. on the technical charts the momentum remains to the downside with the oversold RSI and the pair is trading significantly below the 50, 100, and 200 SMA. So now the level of 1.2100 becomes the first line of defence to stop the further slide which if broken may bring the 1.2000 levels into play.
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