Forex: GBP/USD holds above 1.5630 ahead a busy day

Cable has been holding pretty well above the reportedly 1.5630 option strike expiring yesterday in NY, last at 1.5661 near session highs, inside this 50 pip range the pair has been since late Tuesday NY session when it got sold off from weekly highs at 1.5805. The pair is down -0.25% so far for the week, ahead of a busy London session, including BoE meeting, around current 5-month lows price zone.

“However it won’t be the Bank of England meeting that triggers volatility in sterling,” notes Managing Director at BKAsset Management, Kathy Lien, who expands: “Instead, current Bank of Canada Governor and incoming BoE head will be testifying before the U.K.’s Treasury Select Committee at 4:45am ET / 9:45 GMT or 2 hours before the BoE meeting,” the analyst says, adding: “Carney will be asked some very specific questions about monetary policy tools and whether the existing framework is the right one for the U.K. after barely any economic growth in the past 5 years. If Carney even suggests that he is in favor of easier monetary policy, the hammer could slam down even harder on the British pound,” Kathy concludes.

Apart, 15 minutes before Carney's testimony, UK Industrial and Manufacturing production and Trade balance will be released, followed by BoE announcement at 12:00 GMT.

Immediate support to the downside for GBP/USD lies at recent fresh 5-month lows 1.5630, followed by March 2012 lows at 1.5598, and Aug 10 lows at 1.5574. To the upside, nearest term resistance comes at Jan 28 lows 1.5673, followed by Friday's lows/yesterday's highs 1.5678, and Jan 30 lows at 1.5725.