- GBP/USD bulls are back in town and target the 1.40 are.
- All eyes are not on the bank of England and the interest rate decision.
GBP/USD is trading at 1.3930 and up nearly 1% having climbed from a low of 1.3786 to a high of 1.3934.
The pound has recovered from its lowest level versus the dollar since April as the greenback corrects after the US Federal Reserve surprised the market with a hawkish hold last Wednesday.
The Fed has brought forward the prospects of the timing of an interest rate hike and end emergency bond-buying.
This has put the focus on the Bank of England that announces its latest decision at 12:00 BST on Thursday 24 June.
There will be no new forecasts this time, and policy changes are unlikely. However, a more optimistic economic assessment from the Bank of England could push sterling over the line. 1.4000 will be eyed.
UK inflation is a hot topic. UK inflation hit its highest in nearly two years.
Investors brought forward bets that the BoE would raise interest rates sooner than they thought previously, flattening the yield curve for British government bonds and mirroring a recent move in US Treasuries.
A recent speech by a normally-dovish committee member, Gertjan Vlieghe, has sparked a debate on whether the Bank of England will hike rates in 2022, ahead of the Fed. He will shortly leave his post, but he was floating the possibility of a hike later into 2022.
Currency markets are fully pricing in a 30 basis point hike in rates by the BoE by December 2022 and MPC members look set to remain divided over whether to pull the plug on their 875 billion-pound ($1.2 trillion) government bond purchase programme.
GBP/USD technical analysis
The weekly chart shows that the price is in a correction towards the 38.2% and 50% Fibonaccis that align with old structures and the psychological 1.40 area.
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.