GBP/USD analysis: no BOE rate hikes in the near horizon

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3515

BOE left its monetary policy unchanged, downgrades growth and inflation forecasts.
A weaker dollar prevents the pair from dismantling in the near term.

The GBP/USD pair fell to a fresh 4-month low of 1.3459 on the back of BOE's monetary policy decision and another batch of soft UK data. Industrial Production was up by just 0.1% in March, while Manufacturing Production in the same month fell 0.1%, better than the 0.2% slide expected, but still indicating that economic growth keeps decelerating. Also, the NIESR GDP estimate for the three months to April posted a modest 0.1%, below the 0.3% forecasted. As for the central bank, it left rates unchanged, and offered a dovish stance, as policymakers are concerned about "whether the softness in Q1 might persist." Furthermore, inflation seems to be decelerating at a faster-than-expected pace, as the bank cut inflation and growth projections for this year and the next, reducing the odds for a rate hike in H2 of 2018. Dollar's broad weakness prevented the pair from falling further. Heading into the Asian session, the pair presents a neutral-to-bearish stance for the short-term and according to the 4 hours chart, as it is developing below a flat 20 SMA, while technical indicators have bounced from their daily lows, but remain well below their midlines. The scale leans to the downside for the upcoming sessions, with a break below 1.3445 probably seeing the decline accelerating in spite of dollar's weakness.

Support levels: 1.3480 1.3445 1.3410

Resistance levels: 1.3520 1.3560 1.3600

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

GBP/USD flirts with 1.3500 as USD finds fresh demand

GBP/USD is flatlining near the 1.3500 level the second half of the day on Tuesday, facing some pressure from renewed US Dollar demand as a safe-haven amid surging Oil prices and inflationary concerns. The focus now remains on the Middle East headlines, with Wednesday's US CPI data approaching as this week's key risk event.

EUR/USD stays below 1.1550 amid US-Iran impasse

EUR/USD struggles to gain any meaningful traction on Tuesday and trades marginally lower on the day below 1.1550. Traders seem hesitant to place aggressive bets and opt to wait for further developments surrounding the Middle East crisis and this week's release of the latest US inflation figures.

Gold off two-month highs, back below $4,400 amid surging Oil prices

Gold retreats from its highest level since June 5 at $4,435, touched earlier this Tuesday, and slides back below the $4,400 mark in European trading. Surging Oil prices, amid the US-Iran impasse on talks to reopen the Strait of Hormuz, rekindled inflation concerns, lending support to the US DOllar at the expense of the non-yielding bullion.

Crypto Today: Bitcoin and Ethereum consolidate, XRP dips as optimism for a US-Iran deal fades

Bitcoin (BTC) maintains a neutral outlook on Tuesday while testing support at $64,000. Investors appear to be sitting on the fence, awaiting a catalyst for a breakout above $65,000.

The inflation narrative is still way more important than the employment story

Core bonds sold off yesterday with the belly of the curve slightly underperforming in the US while European curves showed more of a bear flattening. Daily changes on the US curve varied between +4.7 bps (2-yr) and +6.4 bps (7-yr).

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.