GBP/USD testing 1.3020 and pressured at hourly resistance

• GBP/USD pressured at hourly resistance as markets monitor central banks. 
• Money markets are pricing in 160 bps of BoE rate hikes by the end of 2022.

At 1.3029, GBP/USD is flat in Asia, pressured at an hourly resistance and has traded between a narrow range of 1.3022 and 1.3035. However, the pound has been falling against a strong euro while it was reasonably sideways versus the US dollar in the latter part of the day on Wednesday.

The focus overnight was on the hawkish comments from the European Central Bank officials that amplified bets that the central bank would soon hike interest rates, lifting the euro to a one-week high. It was also firm on the back of the expectations that French President Emmanuel Macron would win his reelection bid on Sunday after yesterday's debate. 

Joachim Nagel, president of Germany's Bundesbank, joined a chorus of policymakers in saying the ECB could raise interest rates at the start of the third quarter.  Meanwhile, traders have still focused on the future monetary policy path of the Bank of England also.  

BoE softened its language on the need for more interest rate increases while stressing downside risks to the economy. BoE monetary policymaker Catherine Mann gave a rather detailed and counterbalancing appraisal of the MPC’s challenges.

''The key aspect was the need to address inflation,'' analysts at Westpac said,  which was seen as more concerning and showing signs of spreading to pricing strategies (second-round effects), with front-loaded rate hikes. ''Although tightening could be reassessed if demand falters, the reverse could also be true if the economy continues to fare better and inflation is more persistent.' Money markets are pricing in 160 bps of BoE rate hikes by the end of 2022.