GBP/USD bounces off multi-day low, climbs back to 1.2600 after BoE's 25 bps lift-off
- GBP/USD attracts some dip-buying on Thursday and stalls its retracement slide from the YTD top.
- The BoE’s 25 bps lift-off, along with the hawkish outlook, underpins the GBP and lends support.
- A goodish intraday pickup in the USD demand acts as a headwind and caps any further recovery.
The GBP/USD pair recovers a few pips from a four-day low touched this Thursday and bounces back above the 1.2600 round-figure mark after the Bank of England (BoE) announced its policy decision.
As was widely expected, the UK central bank raised its benchmark interest rates for the 12th time in a row, by 25 bps to 4.50%. In the accompanying monetary policy statement, the BoE indicated that persistently high inflationary pressures would require further tightening. This, in turn, underpins the British Pound and assists the GBP/USD pair to stall the overnight retracement slide from the 1.2680 region, or its highest level since April 2022.
The US Dollar (USD), on the other hand, regains strong positive traction and jumps to over a one-week high amid the prevalent cautious market mood, weighed down by worries about the US debt ceiling and slowing economic growth. This, in turn, holds back traders from placing aggressive bullish bets around the GBP/USD pair and acts as a headwind ahead of BoE Governor Andrew Bailey's comments at the post-meeting press conference.
Later during the early North American session, traders will take cues from the US economic docket, featuring the release of the Producer Price Index (PPI) and the usual Weekly Initial Jobless claims data. This, along with a scheduled speech by Governor Christopher Waller and the broader risk sentiment, might influence the USD price dynamics and produce short-term trading opportunities around the GBP/USD pair.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
