Pound Recovers Amid Potential BOE Hikes
- Britain’s persistently high inflation rate experienced a smaller decline than anticipated.
- The BOE will likely raise interest rates from 4.50% to 4.75% in June.
- Rating agency Fitch placed the United States “AAA” debt ratings on negative watch.
Today’s GBP/USD outlook is slightly bullish as the pound rose against a steady dollar on prospects of more BOE rate hikes. Last month, Britain’s persistently high inflation rate experienced a smaller decline than anticipated.
–Are you interested to learn more about forex bonuses? Check our detailed guide-
At the same time, a closely monitored indicator of core price increases surged to its highest level in 31 years, as indicated by official data. This outcome has increased the likelihood of additional interest rate hikes.
Paul Dales, the chief UK economist at Capital Economics, commented that inflation was more persistent than anticipated by the Bank. It is now highly probable that the Bank will raise interest rates from 4.50% to 4.75% in June and possibly even further in the following months.
Meanwhile, the dollar reached its highest level in two months against most major currencies. It benefited from increased demand as investors sought safe-haven assets due to concerns about a potential US default.
Rating agency Fitch recently expressed apprehension by placing the United States’ “AAA” debt ratings on negative watch. This could lead to a downgrade if lawmakers fail to agree on raising the debt limit.
Additionally, there is an increased likelihood of another quarter-point interest rate hike in June, with approximately 1-in-3 odds. The minutes from the latest meeting revealed that “almost all” policymakers perceive upward risks to inflation.
GBP/USD key events today
Investors expect important economic releases from the US, including GDP, initial jobless claims and pending home sales. The focus will be on the GDP report showing how the economy performed in Q1.
GBP/USD technical outlook: Upside correction
The pound has paused at the 1.2350 support level, where bulls have shown up for a retracement. Bulls aim to retest the 1.2401, but the bearish bias will remain strong if the price stays below the 30-SMA.
–Are you interested to learn more about forex trading apps? Check our detailed guide-
The RSI also shows that bears are still stronger as it trades below 50. If bears return after the pullback, they will look to take the price to the next support level at 1.2300. The bias will, however, change to bullish if the price goes above the SMA.
Looking to trade forex now? Invest at eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Comments are closed.