- GBP/USD has gone into a consolidation phase following Thursday's rally.
- BOE hiked its policy rate by 15 basis points as it expects inflation to peak at 6% in April.
- GBP/USD could gather additional bullish momentum if it manages to clear 1.3370.
GBP/USD has gone into a consolidation phase below 1.3350 on Friday after closing the previous three trading days in the positive territory. The British pound gathered strength on Thursday after the Bank of England (BOE) decided to hike its policy rate by 15 basis points but needs to hold above 1.3370 to convince buyers of a steady advance.
In its policy statement, the BOE warned that inflation could hit 6% in April. Following the BOE's policy announcements, "We're concerned about inflation in the medium term. And we're seeing things now that can threaten that. So that's why we have to act," Governor Andrew Bailey explained. Moreover, the bank is worried about wage inflation feeding into more persistent price pressures in 2022.
The CME Group's BOEWatch Tool shows that markets are currently pricing a 60% chance of another 15 basis points rate hike in March.
In the meantime, the data from the UK showed on Friday that Retail Sales increased by 4.7% on a yearly basis in November after declining by 1.5% in October. Nonetheless, investors showed little to no reaction to this reading.
There won't be any high-tier macroeconomic data releases from the US on Friday and investors will keep a close eye on how the pair moves near key technical levels.
GBP/USD Technical Analysis
With the initial reaction to the BOE's hawkish policy outlook, GBP/USD jumped to its strongest level since November 24 at 1.3376 but the 200-period SMA on the four-hour chart acted as strong resistance near that level. If buyers manage to flip that level into support, the next target on the upside is located at 1.3400 (psychological level) ahead of 1.3460 (static level).
On the downside, interim support seems to have formed at 1.3300 (static level, psychological level) before 1.3270 (100-period SMA, 20-period SMA) and 1.3240 (50-period SMA).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD failed just ahead of the 200-day SMA
Finally, AUD/USD managed to break above the 0.6500 barrier on Wednesday, extending the weekly recovery, although its advance faltered just ahead of the 0.6530 region, where the key 200-day SMA sits.
EUR/USD met some decent resistance above 1.0700
EUR/USD remained unable to gather extra upside traction and surpass the 1.0700 hurdle in a convincing fashion on Wednesday, instead giving away part of the weekly gains against the backdrop of a decent bounce in the Dollar.
Gold keeps consolidating ahead of US first-tier figures
Gold finds it difficult to stage a rebound midweek following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% after US data, not allowing the pair to turn north.
Ethereum suffers slight pullback, Hong Kong spot ETH ETFs to begin trading on April 30
Ethereum suffered a brief decline on Wednesday afternoon despite increased accumulation from whales. This follows Ethereum restaking protocol Renzo restaked ETH crashing from its 1:1 peg with ETH and increased activities surrounding spot Ethereum ETFs.
Dow Jones Industrial Average hesitates on Wednesday as markets wait for key US data
The DJIA stumbled on Wednesday, falling from recent highs near 38,550.00 as investors ease off of Tuesday’s risk appetite. The index recovered as US data continues to vex financial markets that remain overwhelmingly focused on rate cuts from the US Fed.