• GBP/USD marches firmly, gaining some 0.17% on Thursday.
  • The Bank of England (BoE) raised the Bank Rate to 1.75% in an 8-1 vote.
  • Bailey and Co,, acknowledged that the UK would hit a recession, beginning late in 2022.
  • US Initial Jobless Claims rose 260K more than expected as the labor market eases.

The British pound recovered some ground vs. the greenback after the Bank of England (BoE) hiked rates 50 bps, the highest increase in 27 years, while it warned that the UK economy would hit a recession during the second half of the year. That said, the GBP/USD seesawed in a volatile session, hitting a daily high at 1.2212 before plunging to 1.2065 daily lows. At the time of writing, the GBP/USD is trading at 1.2165, up by 0.16%.

GBP/USD pares its losses after a BoE’s dovish hike

On Thursday, the BoE raised the Bank Rate to 1.75% in an 8-1 vote, with Sylvana Tenreyro dissenting as she backed a 25 bps. The Bank of England foresees that the UK will tap into a 15-month recession later in the year, projecting GDP to tumble by 1.5% in 2023.

Regarding inflation, the BoE updated its forecast, which increased to 13% in 2022 Q4, more than the 9.4% estimated in June, and acknowledged it will remain elevated through the rest of 2022 and 2023, at the same time consumption further weakens. Additionally, the BoE announced that it would begin reducing its balance sheet by £10 billion a quarter from next month.

Later, after the BoE’s decision, US Initial Jobless Claims for the week ending on July 30 rose by 260K, higher than 259K estimated, a signal that the labor market is easing. Furthermore, the Balance of Trade in the US narrowed the US deficit to -$79.6 B from -$80.1 B estimations, while Exports jumped compared to imports.

All that said, the GBP/USD settled just below the 50-day EMA after a 150 pip volatile session. Although it stays under the daily moving averages (DMA), the Relative Strength Index (RSI) is aiming higher in bullish territory, keeping GBP/USD buyers hopeful of higher prices.

Upwards, the GBP/USD’s next resistance would be 1.2188, the 50-day EMA. On the downside, the first support would be 1.2100.

What to watch

The UK docket will unveil the Halifax House Price Index for July, alongside the BBA Mortgage Rate. On the Us front, the economic calendar will reveal July’s Nonfarm Payrolls figures foreseen at 250K, less than June’s 372K. The Unemployment Rate is expected to persist unchanged at 3.6%.

GBP/USD Key Technical Levels

GBP/USD

Overview
Today last price 1.2165
Today Daily Change 0.0018
Today Daily Change % 0.15
Today daily open 1.2149
 
Trends
Daily SMA20 1.2023
Daily SMA50 1.2201
Daily SMA100 1.2499
Daily SMA200 1.2965
 
Levels
Previous Daily High 1.2208
Previous Daily Low 1.21
Previous Weekly High 1.2246
Previous Weekly Low 1.196
Previous Monthly High 1.2246
Previous Monthly Low 1.176
Daily Fibonacci 38.2% 1.2141
Daily Fibonacci 61.8% 1.2167
Daily Pivot Point S1 1.2097
Daily Pivot Point S2 1.2045
Daily Pivot Point S3 1.1989
Daily Pivot Point R1 1.2205
Daily Pivot Point R2 1.226
Daily Pivot Point R3 1.2312

 

 

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