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  • BoE might pause its rate hikes on Britain’s new fiscal policy.
  • Bets of a 100bps rate hike at the next BoE meeting have gone down.
  • The Fed will continue hiking rates as long as inflation remains high.

Today’s GBP/USD price analysis is slightly bullish. However, the larger bearish trend might continue as the Bank of England looks ready to pause its interest rate hikes.

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Britain’s new finance minister shredded a stimulus plan raising the possibility of a deeper recession that will fight some of the central bank’s inflation battle.

Jeremy Hunt tightened the screws on the world’s sixth-largest economy in 2023. He eliminated most of Prime Minister Liz Truss’s proposed tax relief and shortened her expansive energy price cap proposal to six months from two years.

Compared to the near certainty before the sweeping budgetary U-turns, investors are now pricing in a 66% likelihood that the BoE will increase its benchmark Bank Rate by a full percentage point on November 3.

Additionally, investors have reduced their bets on the Bank Rate’s peak, which they now believe will be at 5.25%, up from the current 2.25% but down from nearly 6% predicted earlier this month.

Other central banks, like the US Federal Reserve, are not pausing hikes as long as inflation remains stubbornly high, driven by surging energy and food prices largely due to the Ukraine war. In the long run, the dollar would gain against the pound, pushing the pair lower.

GBP/USD key events today

Later in the day, British inflation figures will provide markets with information on how hawkish the BoE should be in its approach to combating inflation. Investors will also see the health of the US housing market when the building permits report is released.

GBP/USD technical price analysis: Bulls eying 1.1485 as the next high in the uptrend

GBP/USD price analysis

The 4-hour chart shows the price trading above the 30-SMA and the RSI above 50. It shows the current trend is bullish. Bulls took over around the 1.1003 support level, pushing the price above the 30-SMA. Since then, the price has made higher highs and higher lows, further confirming the new trend.

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The price is currently trading near the 30-SMA, which provides support, and might bounce up to a new high. 1.1485 is the next resistance level, and the price will likely pause here before bears or bulls take over.

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