Thanks to the dovish BOE rate statement, GBP/USD suffered a sharp selloff last week.

The pair plummeted more than 400 pips, as it fell from the 1.5300 handle to below 1.4900 towards the end of the week.

This sudden drop could mean that a large correction might take place before the downtrend resumes. The pair could pull up to the 1.5000 area first, which is close to the 38.2% Fibonacci retracement level. A larger retracement could mean a pullback all the way to the 61.8% Fib, which is close to the 1.5150 minor psychological resistance.

There are no major reports from the US today but the UK has its manufacturing production due. A rebound of 0.5% is expected and this might be enough to take GBP/USD a little higher for the day.

By Kate Curtis from Trader’s Way