GBP/USD: A typical caution trading ahead of BOE decision

Buoyed by Brexit optimism, renewed US-China trade talks led USD weakness.
BOE to keep rates steady, with 9-0 voting pattern, US CPI to tick high in August.

Dhwani Mehta FXStreet

Having faced rejection near the 1.3080 in the overnight trades, the GBP/USD pair entered into a phase of consolidation around the midpoint of 1.30 handle, as traders gear up for the Bank of England (BOE) monetary policy announcement due at 1100 GMT.

GBP/USD could drop to 1.2950 if BOE disappoints the hawks

The spot trades in a 15-pips tight range so far this Thursday, consolidating the latest run-up to six-week highs at 1.3089, as markets await the BOE policy meeting and minutes for the next direction.

The tone/ language in the BOE’s monetary policy statement is likely to be closely eyed for fresh hints on the central bank’s rate hike outlook, as the BOE MPC is likely to leave the benchmark interest rate unchanged at 0.75%.

In the meantime, Cable will remain underpinned by the positive development around the Brexit issue after Bloomberg reported late-Wednesday that the EU would start redrafting the Irish Brexit protocol to appease the UK.

Further, a recovery in the risk sentiment and broad-based US dollar softness following news that the US is reaching out to China to a start fresh round of trade talks also helped to keep the upbeat tone intact around the risk currency, the GBP.

Besides the BOE rate decision, the European Central Bank (ECB) monetary policy announcement and US CPI report will also remain in focus for any volatility-related effect on the pound.

GBP/USD Technical Levels

“.. in the 4 hours chart, it's still finding buyers on dips toward a bullish 20 SMA. Technical indicators in the mentioned chart maintain their bullish slopes near overbought levels, with no signs of upward exhaustion. The pair has an immediate resistance in the 1.3090 price zone, and a break above it should open doors for a continued advance up to 1.3170, the 50% retracement of the 2016/18 rally. Below the 1.3020 region, on the other hand, the risk will likely skew to the downside, with the next relevant support being 1.2985, where the pair has the 61.8% retracement of the mentioned rally. Support levels: 1.3020 1.2985 1.2940. Resistance levels: 1.3095 1.3130 1.3170,” FXStreet’s Chief Analyst Valeria Bednarik noted.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

EUR/USD holds above 1.1500 after ECB, US PPI

EUR/USD has come under fresh selling pressure and heads toward 1.1500 in Thursday's American trading. The European Central Bank delivered rate hikes as expected, while US wholesale inflation was higher than anticipated in May.

GBP/USD extends slide below 1.3350 on renewed USD demand

GBP/USD is falling below the 1.3350 level in the American session on Thursday. Increased hawkish Fed bets and looming Mideast geopolitical risks sponsor the latest leg up in the US Dollar, particularly after the Producer Price Index jumped to 6.5% YoY in May.

Gold challenges fresh 2025 lows below $4,100

Gold trades around $4,070 a troy ounce, dangerously approaching the psychological $4,000 mark. A softer Core US Consumer Price Index eased concerns about a runaway inflation spiral, but renewed concerns surged after the higher-than-anticipated May US PPI report.

Crypto Today: Bitcoin, Ethereum, XRP rebound broadens despite continued US-Iran strikes

Bitcoin steadies its recovery on Thursday, edging higher toward $63,000 despite incessant capital outflows. Meanwhile, altcoins, including Ethereum and Ripple, exhibit subtle rebound signs, trading above $1,650 and $1.12, respectively.

Indonesia surprise rate hike may not be enough to save the Rupiah

The surprise rate hike from Bank Indonesia, aimed at protecting the Indonesian Rupiah from sliding further, seems to have worked for now. The rate increase definitely helps, but there’s more work to do if Jakarta wants to ease investors’ concerns for good.

4.2% headline, 0.2% core: Why the Fed's next hike may be targeting the wrong problem

May's CPI put headline inflation at 4.2% on the year, up from 3.8% in April and the hottest reading since April 2023, while core prices rose just 0.2% on the month, undershooting the 0.3% consensus and halving April's pace.