GBP/USD Forecast: Room for correction if BOE signals pause in tightening cycle
GBP/USD has preserved its bullish momentum and climbed to fresh multi-week highs above 1.2300 following Wednesday's sharp upsurge. The Bank of England's (BOE) policy announcement is likely to trigger the next big movement in the pair.
On Wednesday, the US Federal Reserve raised its key rate by 25 basis points (bps) to the range of 4.75-5% as expected. In its policy statement, the Fed dropped the comment that ongoing rate increases will be appropriate and adopted a cautious language, saying "some additional policy firming may be appropriate." Additionally, the terminal rate projection in the dot plot stood unchanged at 5.1%. Read more...
GBP/USD remains firm above 1.2300 after BoE hikes rates
GBP/USD recedes from earlier tops near 1.2340 and revisits the 1.2300 neighbourhood after the BoE raised the policy rate by 25 bps to 4.25%, as widely expected on Thursday. The vote to hike rates was 7-2, with members Tenreyro and Dhingra favouring an unchanged stance.
From the statement, the central bank still expects inflation to drop significantly in Q2 2023, while it sees the economic activity to increase slightly during the same period. Regarding the recent effervescence in the banking sector, the Financial Policy Committee (FPC) stressed that the UK banking system remains resilient and maintained robust capital and strong liquidity positions. Read more...
GBP/USD: A test of 1.25 in the coming days is looking quite likely – ING
The Bank of England (BoE) is forecast to hike its key rate by 25 bps to 4.25%. In the view of economists at ING, GBP/USD is set to climb toward 1.25 in the coming days. “Markets are now fully pricing in a 25 bps scenario and will therefore look for some indications that the further 40 bps currently embedded in the GBP OIS curve is warranted.”
“The division within the BoE’s MPC may be nothing but exacerbated by the recent market turmoil, the risk is that markets may receive very little guidance on future policy paths.” Read more...
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