Pound Sterling recovery sustains as central bank to keep rates elevated for longer
The Pound Sterling (GBP) strengthens after hopes of more interest rate hikes from the Bank of England (BoE) are renewed. The GBP/USD pair discovers buying interest as the United Kingdom inflation is expected to remain well above 2% for the next four years. As the central bank is failing to achieve price stability sooner, further policy tightening cannot be ruled out.
This week, the UK manufacturing sector for June will be under scrutiny. The performance of British factories and preliminary GDP for the April-June quarter will be watched closely as the policy environment is highly restrictive and observers wonder if the economy will manage to avoid a recession. Meanwhile, claims from BoE Pill and the National Institute of Economic & Social Research (NIESR) indicate that UK PM Rishi Sunak will fulfill his promise of easing inflation to 5% by the end of 2023. Read more…
GBP/USD Forecast: Pound Sterling faces key resistance at 1.2825
After dropping below 1.2700 during the European trading hours on Tuesday, GBP/USD managed to erase a large portion of its daily losses before closing the day slightly above 1.2740. Supported by the positive shift seen in risk mood early Wednesday, GBP/USD extended its recovery beyond 1.2750. Although the technical outlook shows that sellers struggle to dominate action, the pair could find it difficult to rise steadily unless it clears the strong resistance that seems to have formed at 1.2825.
The bearish opening in Wall Street allowed the US Dollar (USD) to continue to find demand as a safe haven on Tuesday. After Philadelphia Federal Reserve Bank President Patrick Harker noted that they could probably start lowering the policy rate next year, however, the 10-year US Treasury bond yield declined sharply toward 4% and limited USD’s gains. Read more…
