- The pound remained close to a nearly 14-month high in anticipation of Thursday’s BOE policy meeting.
- The US markets were closed on Monday due to a holiday.
- Economists expect the BOE to implement another 25-basis-point interest rate hike.
Today’s GBP/USD outlook is bullish. While the pound experienced a slight decline of 0.04% to 1.2812, it remained close to a nearly 14-month high in anticipation of Thursday’s Bank of England policy meeting. Meanwhile, US markets were closed on Monday due to a holiday.
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According to a Reuters poll of economists, the Bank of England will likely implement another 25-basis-point interest rate hike. This is in response to inflation, which exceeds its target by more than four times.
Bank of Singapore’s Sim remarked, “Expectation and necessity are at play. The UK stands out with an ongoing inflation issue, and the Bank of England must address this problem.” Notably, in December 2021, the Bank of England became one of the first major central banks to conclude its loose monetary policy adopted during the pandemic.
Moreover, for 12 consecutive meetings, it has gradually raised borrowing costs by 440 basis points through incremental rate increases. However, these measures have thus far been insufficient in curbing inflation.
In the past week, BoE Governor Andrew Bailey and policymakers Jonathan Haskel and Catherine Mann adopted a hawkish stance.
Additionally, consumer prices in April recorded an 8.7% year-on-year increase, the joint highest among the advanced economies in the Group of Seven. Moreover, a closely-monitored metric for core price rises surged to a 31-year high, underscoring the severity of the inflationary pressures.
GBP/USD key events today
Investors will keep speculating on the BOE meeting as no key economic releases are coming from the UK or the US today.
GBP/USD technical outlook: Bulls resting above the 1.2800 key level.
GBP/USD is in a solid bullish trend in the 4-hour chart, with the price trading above the 30-SMA, respecting it as support. Furthermore, the RSI has mostly stayed above 50, characteristic of a bullish trend.
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The strong bullish momentum has seen the price break above resistance levels, barely pausing. Bulls have broken above the 1.2700 and 1.2800 resistance levels. However, the price has paused, consolidating slightly above the 1.2800 resistance level. From here, bulls will likely hit the next resistance level at 1.2900.
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