GBP/USD Forecast: Sterling boosted by the hawkish twist in MPC
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- Sterling is boosted by the Bank of England chief economist Andy Haldane joining the camp of voters favoring rate hike within MPC in June.
- GBP/USD rose almost 2-big figures and it is approaching a psychological level of 1.3300.
- Long-term, the GBP is capped in 1.3100-1.3480 range bordered by 38.2% and 50% Fibonacci retracement levels of a post-Brexit slump.
The GBP/USD is trading up 0.35% at around 1.3385 against the US Dollar after the pair was flirting with 1.3100 level on Thursday morning before the Bank of England monetary policy decision was made public.
The Bank of England Monetary Policy Committee (MPC) left the Bank rate unchanged at 0.50% in line with expectations, but the voting pattern of the nine-members strong Committee shocked the market with the Bank’s chief economist Andrew Haldane joining Ian McCafferty and Michael Saunders in voting in favor of a rate hike making it 6-3 instead of 7-2 expected.
Apart from the hawkish turn in the voting pattern, the overall tone of the June monetary policy statement was more hawkish, indicating that the UK economy is actually doing a bit better than the first-quarter data point out and that the UK labor market tightness is set to drive inflation higher, justifying the rate hike.
Technically, the GBP/USD leaped off 1.3100 representing 38.2% Fibonacci retracement line of a post-Brexit slump from 1.5020 to 1.1940 and after breaking round big figure of 1.3200 it is heading towards 1.3300. Key technical oscillators are pointing in upwards on a daily chart. The death star crossover of the 50-day and 100-day moving average on the daily chart indicates further downside potential for GBP/USD, with the currency pair being rejected in the first attempt to conquer 1.3100 representing 38.2% Fibonacci retracement of the post-Brexit slump being the immediate target. With Slow Stochastics and Relative Strength Index pointing upwards, the move should be limited by 50% Fibonacci retracement of above-mentioned move at 1.3480.
The immediate target remains 1.3300 with the break above targeting 1.3350 and 1.3400 next.
GBPUSD Daily chart
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