- GBP/USD continues its bullish trajectory in the North American session, currently trading at 1.2529, which represents an advance of 0.20%.
- Hardline comments from Bank of England (BoE) officials, including Governor Andrew Bailey, have boosted the pound’s rise.
- GBP/USD traders are awaiting the release of the minutes of the Federal Reserve’s latest policy meeting, which is likely to indicate a data-dependent approach to future policy decisions.
The GBP/USD pair extended its gains during the North American session, after hitting a daily low of 1.2446, although some hawkish comments from Bank of England (BoE) officials sponsored a rise back above 1.2500. At the time of writing, the pair was trading at 1.2529, with a gain of 0.20%, slightly below the two-month high of 1.2559.
GBP/USD above 1.2500 boosted by comments from BoE officials, soft US economic data
BoE Governor Andrew Bailey appeared before Parliament’s Treasury Select Committee and declared that inflation was on track towards the 2% target, although he stressed that risks tilted to the upside. He added that it is “too early to think about rate cuts,” although swap markets have priced in rate cuts over the next year. During the same hearing, Catherine Mann, one of the BOE’s hawkish members, favored additional tightening to ensure inflation returns to its target.
GBP/USD will be awaiting the release of the Autumn Statement, in which Chancellor Jeremy Hunt is expected to present changes to fiscal policy. Mr Hunt said: “In my autumn statement tomorrow, I will focus on how we boost business investment and get people back to work to deliver the growth our country needs. We have delivered on our commitment to halve inflation, but “We must continue to support the Bank of England to reduce inflation to 2%. That means being responsible with the nation’s finances.”
On the other side of the pond, the US economy continues to show signs of resilience, except in the real estate market. Sales of Existing Homes in the US fell -4.1% in October, the lowest level since November 2022, going from 3.95 million to 3.79 million. Later, the US Federal Reserve is expected to release the minutes of the latest monetary policy meeting, which are expected to show that the US central bank’s approach would depend on the data.
Meanwhile, money market futures expect the Fed to cut rates by 100 basis points in 2024, which would see the federal funds rate fall from 5.50% to 4.50%. Consequently, US bond yields fell as investors did not expect additional rate hikes. This weighed on the US Dollar, which, according to the Dollar Index (DXY), has fallen 2.50% since November 13.
Therefore, the GBP/USD bias remains bullish, but a hawkish tilt from the Fed could open the door to a correction, with sellers eyeing the 200-DMA.
GBP/USD Price Analysis: Technical Outlook
The GBP/USD pair made a new three-day high, but unless it manages a daily close above the last high reached on September 11 at 1.2548, the risk of a pullback remains. If the pair reaches the mentioned high, the next resistance would be the 1.2600 figure, followed by the August 30 high at 1.2746. On the other hand, the first support is located at 1.2500. Breaking the latter would expose the 200-day moving average (DMA) at 1.2446.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
