- GBP/USD trims some of its intraday gains after the BoE announced a 50 basis point rate hike.
- The dollar remains under pressure below a two-decade high, offering some support to the pair.
- Expectations of aggressive rate hikes from the Fed act as a tailwind for the dollar and should limit the pair’s rise.
The pair GBP/USD finds some selling and trims some of its strong intraday gains after the Bank of England announced its monetary policy decision. The pair returns to the region of 1.1300although it remains comfortably above the lowest level since 1985 hit earlier this Thursday.
As expected, the UK central bank has raised interest rates by 50 basis points (the seventh increase since December) at the end of the September monetary policy meeting. However, this might have disappointed some investors anticipating a more aggressive rate hike, which has turned out to be a key factor acting as a headwind for sterling.
Secondly, the US dollar consolidates its strong intraday decline from a new two-decade high, which continues to lend some support to the GBP/USD pair. Thursday’s sharp drop in the dollar comes following the news that the Japanese government has intervened in the foreign exchange markettriggering a massive rally in the Japanese yen.
Having said that, the more aggressive stance adopted by the Federal Reserve should continue to lend some support to the dollar. On the other hand, the bleak outlook for the UK economy could help curb any significant rise in the GBP/USD pair, warranting some caution before positioning for any significant near-term recovery moves.
GBP/USD technical levels
Source: Fx Street
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