GBP/USD Forecast: Sterling supported by hawkish monetary policy comments from Ian McCafferty
|The GBP/USD is trading at around 1.4155 after the Monetary Policy Committee (MPC) member of the Bank of England Ian McCafferty said the Bank should not delay hiking interest rates again due to a possibility of faster pay rises. McCafferty’s comments are aired about the month ahead of the crucial May MPC meeting that is pondered to deliver another rate hike.
The case of May MPC meeting is perfect because the Bank of England will release the quarterly Inflation Report and Governor Mark Carney will have a chance to justify the move at the subsequent press conference.
Mr. McCafferty is a traditional monetary policy hawk in the nine-member MPC that voted in favor of the interest rate hike also during the last MPC meeting on March 22 voting together with Mr. Michael Saunders in favor of the rate rise, the minutes from the March meeting revealed.
The rate hike comments also overshadowed the main theme of late-trade wars- that saw Chinese President Xi Jinping choosing a free trade friendly tone in his policy speech overnight that supported the return of risk appetite to the FX market with the US Dollar being the primary beneficiary.
After breaking the upper boundary of the downward sloping trend, the GBP/USD is making further progress towards the lower border of the previous upward sloping trend with technical oscillators elevated.
Technical oscillators including Relative Strength Index (RSI) and Slow Stochastics are both elevated and are turning higher with the RSI touching the overbought territory. Momentum is rolling lower, but the space for Slow Stochastics indicator moving further higher indicates potential on the upside, especially on the market driven by monetary policy comments. While unable to progress towards 1.4200, the GBP/USD is seen stuck in the range of 1.4080-1.4200.
GBP/USD 1-hour chart
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