Pound Sterling (GBP) can be fairly active today due to BoE MPC. Pair was last seen trading at 1.2954 levels., OCBC's FX analysts Frances Cheung and Christopher Wong note.

GBP may revert to retrace lower

"While BoE is widely expected to keep its policy Bank Rate unchanged at 4.5%, the vote split is the one that should cause some excitement. To recap at the Feb MPC meeting, the surprise came when 2 members voted for a 50bp cut while 7 other members voted for a 25bp cut. In particular, Mann voting for a 50bp cut was a surprise as she is typically a hawk."

"The dovish shift then prompted markets to re-assess how a stagflation story may already be playing out for UK economy. BoE halved growth forecast and revised upward inflation projection. This time round, our rates strategist flagged out that the vote split could be 7 for hold and 2 for cut. A vote split that deviates from this 'neutral' scenario may trigger some mild market repricing, in turn having an impact of GBP."

"Bullish momentum on daily chart is fading while RSI is near overbought conditions. GBP bulls need to clear above 1.3050 for gains to gather momentum. Next resistance at 1.3120 levels (76.4% fibo retracement of Sep high to Jan low). Failing which, GBP may revert to retrace lower. Support at 1.2920 (61.8% fibo), 1.2800/25 levels (21, 200 DMAs). That said, bullish crossovers still point to a GBP bull trend remaining intact."