GBP/USD => The pair advanced to 1.22

Dow Jones Index => The index fell to 33,000

GBP/USD => The pair broke below 1.24

GBP/USD rose from weekly lows after the dovish boe vote

Sterling/dollar edged higher after falling 2 percent in the previous session following the Bank of England's poor performance. The central bank raised interest rates by 50 basis points, bringing its benchmark lending rate to 3.5 percent, in line with expectations. However, two policymakers voted to keep rates unchanged, making the vote more dovish than expected, especially next to the more hawkish Fed. Today's attention turns to UK retail sales, which are expected to have risen 0.3% month-on-month in November, following a 0.6% rise in October. UK business activity data showed that the composite PMI is expected to fall further from 48.2 to 48 in December, supporting the view that the UK economy is in recession. Weak data could pull the pound lower.

Where is GBP/USD likely to go?

After hitting resistance at 1.2445, GBP/USD retreated and broke through the multi-month upward channel. The pair continues to hold above 200 SMA, coupled with the relative strength indicator remaining above 50, supporting the view that the pair may have more room to move higher. Buyers need to rise above 1.2240 to re-enter the rising channel and break 1.2445 to make higher highs. Sellers may seek to take out the 200 moving average at 1.2130, opening the door to the psychological level of 1.20.

The Dow Jones Industrial average falls in risk aversion

The Dow plunged 2.25% yesterday and maintained those losses today, as hawkish central bank guidance from the Federal Reserve combined with weaker-than-expected retail sales weighed on risk sentiment. Earlier this week, the Fed raised rates by 50 basis points, down from 75 basis points, but also raised the terminal rate to 5.1 per cent. The prospect of a prolonged rate hike has dragged down IS stocks. Us retail sales were also weaker than expected, falling 0.6 per cent in November from the previous month, less than the 1.3 per cent drop that was the biggest in almost a year. Looking ahead, the US composite PMI data is expected to show business activity contracting at the same pace of 46.4. Level 50 separates expansion from contraction.

Euro Stoxx stabilizes after ECB-induced sell-off

The EUstoxx50 index fell 3.5 percent in the previous session after the European Central Bank raised interest rates by 50 basis points, in line with expectations, raising its deposit rate to 2 percent. Christine Lagarde, the president of the European Central Bank, has also warned that more rate hikes would tame double-digit inflation. Lagarde said the central bank intends to raise interest rates by 50 basis points over a period of time, a more hawkish stance than expected. The central bank also unveiled plans to shrink its balance sheet, although details will be released next year. Attention returns to the economic calendar today with the release of PMI data, which is expected to show that business activity contracted at a slightly slower pace of 48 in December, up from 47.8. Level 50 separates expansion from contraction. Eurozone inflation will also be announced and will fall to 10%.

Support for the pair can be seen at 3810 (August high) and 3750 (50 SMA).

The resistance can be seen at 3970 (yesterday's high) and 4035 (December high).