GBP/USD hits new six-month low below 1.2250 after surprise BoE decision

• GBP/USD extends its sell-off and marks a new six-month low, approaching the 1.2200 level.
• The Bank of England surprises by maintaining the interest rate at 5.25% at the September meeting.
• The focus is on US economic data to further boost the GBP/USD pair.

The GBP/USD pair suffers a new wave of selling and reaches its lowest level since March this year, as the British pound is affected by the Bank of England’s dovish decision on interest rates.

BoE pause hits sterling

After the September meeting, the BoE decided to maintain the reference interest rate at 5.25%, compared to market expectations of an increase of 25 basis points (bp) to 5.50%. However, sector experts and analysts had begun to assess the possibilities of a status quo following the unexpected drop in British inflation data for August.

The Office for National Statistics (ONS) reported on Wednesday that the UK’s annual Consumer Price Index (CPI) rose 6.7% in August, a cooling off from the 6.8% rise recorded in July. The CPI for services rose 6.8% year-on-year, compared to 7.4% in July. According to the ONS, “the largest contributions to the decline in CPI rates came from food and accommodation services.”

In the last few minutes, GBP/USD is reversing the decline to multi-month lows, recovering the 1.2250 barrier, still down 0.60% on the day.

Attention is now focused on the release of US economic data, including weekly jobless claims and existing home sales for fresh valuations of the Dollar, especially after the Federal Reserve (Fed) The U.S. kept rates unchanged on Wednesday but projected a further 25 basis point rate hike this year and 50 basis points of rate cuts in 2024, up from 100 basis points of 2024 cuts in forecasts. June.

GBP/USD technical levels to watch