• BoE’s raises rates to 5.25%, though GBP/USD dipped to a one-month low.
  • The BoE’s decision was on a split vote, with two members eyeing a 50 bps rate hike.
  • US Initial Jobless Claims came in line with estimates at 227K, while the ISM’s business services activity reading was 52.7, indicating a potential slowing down in the economy.

GBP/USD trims some of its earlier losses after the Bank of England (BoE) decided to raise rates by a quarter of a percentage point, as it warned borrowing costs will stay high. That, alongside business activity in the United States (US) slowing down, has lent a lifeline to the Sterling (GBP), which tumbled after BoE’s decision to a one-month low of 1.2620. At the time of writing, the GBP/USD is trading at 1.2705, registering minuscule losses of 0.04%.

Sterling rebounds from a one-month low, buoyed by the Bank of England’s decision to lift rates and slower US business activity. The pair is now trading at 1.2705, with minimal losses of 0.04%

The GBP/USD dived sharply after the BoE lited rates to 5.25% and warned, “The  MPC will ensure that Bank Rate is sufficiently restrictive for sufficiently long to return inflation to the 2% target.” The BoE noted that although inflationary pressures are easing, the UK’s Consumer Price Index (CPI) remained at 7.9% in June, the highest in any major economy. In the meantime, market participants polled by Reuters expect UK Bank Rates to peak around 5.75%, indicating that two additional rate increases are expected toward the end of the year.

The BoE’s vote split was 6-3, with two members expecting a 50 bps hike, while Swati Dhingra voted to keep rates unchanged.

Aside from this, US economic data revealed the labor market gave signs of easing in the week ending July 29, with Initial Jobless Claims coming at 227K, aligned with estimates. Even though the data is encouraging, mixed reports during the last few months keep investors guessing the job market trend.

Other data released by the Institute for Supply Management (ISM) recently revealed that business services activity remains at expansionary territory at 52.7, below forecasts of 53, and trailed June’s 53.9. Even though data remains positive, it shows that activity is cooling down, putting on the table a recessionary scenario if consumers don’t support the economy.

Following the data, the greenback weakened as the GBP/USD gained some traction, trading back above 1.2700. Despite rising US Treasury bond yields, which had continued to edge higher, the US 10-year Treasury bond yield gained eleven basis points at 4.191%.

The upcoming US Nonfarm Payrolls report for July is anticipated to provide a comprehensive assessment of the labor market. If the report reveals unexpected positive outcomes, it may lead to discussions about implementing further interest rate hikes by the US Federal Reserve (Fed). Conversely, if the results fall short of expectations, the Fed might adopt a cautious approach in preparation for the September monetary policy meeting.

Meanwhile, Richmond’s Federal Reserve President, Thomas Barkin, made statements emphasizing the concern over high inflation levels. He mentioned that the inflation reading from the previous month was favorable, and he hopes it indicates a positive direction in managing inflationary pressures.

GBP/USD Technical Levels

GBP/USD

Overview
Today last price 1.2706
Today Daily Change -0.0006
Today Daily Change % -0.05
Today daily open 1.2712
 
Trends
Daily SMA20 1.29
Daily SMA50 1.272
Daily SMA100 1.2574
Daily SMA200 1.2306
 
Levels
Previous Daily High 1.2806
Previous Daily Low 1.268
Previous Weekly High 1.2996
Previous Weekly Low 1.2763
Previous Monthly High 1.3142
Previous Monthly Low 1.2659
Daily Fibonacci 38.2% 1.2728
Daily Fibonacci 61.8% 1.2758
Daily Pivot Point S1 1.2659
Daily Pivot Point S2 1.2607
Daily Pivot Point S3 1.2534
Daily Pivot Point R1 1.2785
Daily Pivot Point R2 1.2858
Daily Pivot Point R3 1.291

 

 

 
Share: Feed news

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.

Recommended content


Recommended content

Editors’ Picks

EUR/USD stays below 1.0700 after upbeat US PMI data

EUR/USD stays below 1.0700 after upbeat US PMI data

EUR/USD stays on the back foot and trades in negative territory below 1.0700 as the US Dollar benefits from upbeat data in the American session. S&P Global reported that the economic activity in the US private sector continued to expand at a robust pace in June.

EUR/USD News

GBP/USD drops to fresh multi-week low below 1.2650

GBP/USD drops to fresh multi-week low below 1.2650

GBP/USD remains under bearish pressure and trades at its lowest level since mid-May below 1.2650. The stronger-than-forecast Manufacturing and Services PMI data from the US helps the USD hold its ground and causes the pair to stretch lower.

GBP/USD News

Gold drops below $2,340 as US yields rebound

Gold drops below $2,340 as US yields rebound

Gold loses its traction and trades deep in the red below $2,340 in the second half of the day on Friday. The benchmark 10-year US Treasury bond yield pushes higher following the upbeat PMI data from the US, weighing on XAU/USD.

Gold News

Bitcoin retraces to crucial support

Bitcoin retraces to crucial support

Bitcoin price encounters resistance at weekly highs before retracing to seek support at a crucial level, while Ethereum and Ripple align closely with Bitcoin's movements, gearing up to surpass resistance barriers and embark on upward rallies.

Read more

Week ahead – US PCE inflation the highlight of a relatively light agenda

Week ahead – US PCE inflation the highlight of a relatively light agenda

Core PCE inflation to test bets of two Fed rate cuts in 2024. Yen awaits BoJ Summary of Opinions, Tokyo CPI. Canadian CPI data also enters the spotlight.

Read more

Forex MAJORS

Cryptocurrencies

Signatures