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GBP/USD drops as BoE holds rates, hints uncertainty on future cuts

  • GBP/USD falls to 1.2964, reversing post-BoE spike as rates hold steady with hints of cautious future easing.
  • MPC shows division; Dhingra votes for a 25 bps cut, while others advocate a gradual policy shift.
  • US data shows weakness with rising jobless claims and a falling Philly Fed Business Index.

The British Pound (GBP) depreciated against the US Dollar (USD) after the Bank of England (BoE) decided to keep rates unchanged and warned about interest rate cuts due to “a lot of economic uncertainty at the moment,” said BoE Governor Andrew Bailey. At the time of writing, GBP/USD is trading at 1.2964, down 0.29%.

Sterling falls 0.29% as Bailey warns of economic uncertainty, dissent emerges within BoE

Traders are still digesting the BoE’s decision, which wasn’t unanimous, with Monetary Policy Committee (MPC) member Swati Dhingra being the dissenter, with her voting for a 25 basis points rate cut (bps).

In its monetary policy statement, the bank maintained that “a gradual and careful approach to policy restraint remains appropriate.” The BoE reiterated that monetary policy is not on a preset course and added that domestic wage pressures remain elevated, though they are moderating.

BoE officials noted that labor costs drove the increment in non-energy goods prices and underscored that surveys suggest weak economic growth.

Initially, the GBP/USD pair spiked to 1.2979 before reversing its course and re-testing the daily low of 1.2935. So far, the major has stabilized near 1.2960, but it remains below its opening price.

Across the pond, Initial Jobless Claims for the week ending March 15 ticked up from 221K to 223K, but was below forecasts of 224K. Other data showed that business activity is deteriorating, with the Philadelphia Fed Business Index tumbling from 44.3 to 18.1 in February.

GBP/USD Price Forecast: Technical outlook

GBP/USD seems to have peaked near 1.3000. Thursday’s price action is forming a ‘bearish engulfing’ candle chart pattern, indicating buyers take risk off the table while sellers are stepping, pushing the spot price lower. If GBP/USD closes daily below the March 18 1.2951 low, this could exacerbate a retracement to test 1.2900, followed by the 200-day Simple Moving Average (SMA) at 1.2796. On the other hand, buyers claiming 1.3000 could challenge November’s peak at 1.3047.

British Pound PRICE Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the New Zealand Dollar.

 USDEURGBPJPYCADAUDNZDCHF
USD 0.60%0.31%0.04%0.13%1.01%1.22%0.68%
EUR-0.60% -0.31%-0.55%-0.47%0.39%0.61%0.09%
GBP-0.31%0.31% -0.25%-0.18%0.70%0.92%0.38%
JPY-0.04%0.55%0.25% 0.07%0.94%1.14%0.70%
CAD-0.13%0.47%0.18%-0.07% 0.87%1.08%0.55%
AUD-1.01%-0.39%-0.70%-0.94%-0.87% 0.22%-0.31%
NZD-1.22%-0.61%-0.92%-1.14%-1.08%-0.22% -0.56%
CHF-0.68%-0.09%-0.38%-0.70%-0.55%0.31%0.56% 

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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