- GBP/USD eyes a directionless move but more downside is on the cards.
- The BOE has reinforced the chances of a recession on the weak labor market.
- The US economy has managed to report higher job additions than the forecasts.
The GBP/USD pair is oscillating in a narrow range of 1.2323-1.2369 as renewed recession fears after the monetary policy announcement by the Bank of England (BOE) have sidelined investors. The announcement of the monetary policy by BOE Governor Andrew Bailey unveiled a rate hike by 25 basis points (bps) with a majority of 6-3. The minority policymakers were advocating a consecutive rate hike by 50 bps.
Apart from the rate hike decision, the BOE dictated that inflation will persist for a longer period and it may reach up to 10% by 2024. However, the UK administration is much concerned over corporate inability to produce sufficient employment. The households are facing the strong headwinds of higher energy bills and food prices, which are already impacting their real income. And, lower job additions with higher personal expenses are fueling the signs of recession.
Meanwhile, the US dollar index looks to reclaim the round level resistance of 104.00 as higher US Nonfarm Payrolls (NFP) has bolstered the odds of a consecutive jumbo rate hike by the Federal Reserve (Fed). The US NFP came in at 428k, significantly higher than the expectations of 391k but a little lower than the prior print of 431k. Going forward, the US inflation numbers will remain in the spotlight, which are expected to land at 8.1%, lower than the previous figure of 8.5%.
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