- The pound showed resilience following the Bank of England’s decision to hold rates.
- The BoE signaled no imminent intention of cutting rates.
- There are concerns about an impending UK economic recession.
On Friday, there was bullish sentiment in the GBP/USD price analysis as the British pound stood firm against the dollar. It showed resilience following the Bank of England’s decision to keep interest rates at a 15-year peak. Still, the central bank signaled no imminent intentions of cutting rates.
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Moreover, Governor Andrew Bailey cautioned against complacency and emphasized that inflation remained too high. Bailey stated, “We will closely monitor the need for further interest rate hikes. Nevertheless, it is far too early to consider rate reductions.”
Still, investors concluded that the subsequent rate adjustment by the BoE was more likely to be a decrease.
There are concerns about an impending UK economic recession and limited growth in the near future. However, the BoE reiterated its commitment to keeping borrowing costs elevated. Notably, the UK economy is already grappling with the impact of interest rate increases from December 2021 to August this year.
Meanwhile, British government bond yields significantly dropped as the BoE painted a grim economic outlook. In recent days, the European Central Bank and the U.S. Federal Reserve also opted to maintain their current interest rates.
Governor Bailey acknowledged the potential inflation risk from elevated energy prices due to the Middle East conflict. However, he noted that such an impact had not materialized thus far.
GBP/USD key events today
It will be a busy day for GBP/USD traders as they will receive several significant economic reports from the US, like:
- The US monthly nonfarm payrolls report.
- ISM non-manufacturing PMI.
- S&P Global Services PMI
GBP/USD technical price analysis: Bulls meet strong resistance at 1.2200.
The GBP/USD price has halted at the 1.2200 resistance level after a strong surge from the 1.2100 support level. Notably, the pound has stayed in a range between the 1.2100 support and the 1.2200 resistance level. It attempted to break out of this range but was sharply rejected and fell back into consolidation.
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Therefore, although the price is above the 30-SMA, supporting bulls, this might soon change. If the 1.2200 resistance holds firm, the price will likely fall back below the 30-SMA to retest the 1.2100 range support. However, if bulls are stronger, the price will rise to 1.2275 resistance.
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Saqib Iqbal
