This rate decision was different in Britain – one member, Andrew Sentance, wants to address the rising inflation and to raise the rates. This is the first signal. GBP/USD reacts with a rise and aims to reach 1.50.
Andrew Sentance doesn’t disregard inflation like his boss Mervyn King. King, the governor of the Bank of England, blamed fuel prices for the rise of inflation above the 1-3% target. But Sentance wants a rate hike – the MPC Meeting Minutes revealed that he wants to lift the benchmark interest rate from 0.5% to 0.75%.
Sentance might be reacting to the call by the new Prime Minister. David Cameron called the central bank to tackle the rising inflation, and to get the CPI back to normal. Also George Osborne, his Chancellor of the Exchequer, reiterated the inflation.
Currently, Sentance is the only one. All the other members voted to leave the rates unchanged. But his vote made it clear that something was moving. A rate hike will boost the Pound, and even the initial talks about it already push it higher.
GBP/USD moved from 1.4850 to 1.4915 and the move continues. It’s getting close to this week’s high at 1.4937, which is the highest level in 6 weeks. The next minor line is the round number of 1.50, and it’s followed by a more serious resistance line at 1.5050.
A drop will be met by 1.4780, which turned from a strong resistance line to a support line, and its followed by 1.4610.
More lines + a chart can be seen in the British Pound forecast.
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