- GBP/USD recovers from its lowest level since 1985.
- A modest pullback in the dollar from a fresh two-decade high offers support for the pair.
- Market attention remains focused on the Bank of England’s crucial monetary policy decision.
The pair GBP/USD has attracted some buying near the 1.1200 region and rebounds from its lowest level since 1985 touched at the beginning of the European session this Thursday. The pair is currently around the 1.1300 level, pulling back from the daily high near 1.1350. A significant recovery seems unlikely as attention remains focused on the monetary policy decision of the Bank of England.
Heading into the key event from the central bank, a repositioning trade turns out to be a key factor offering support to the GBP/USD pair. Aside from this, the intraday rally could also be attributed to cross strength, which is due to a Bank of Japan inspired GBP/JPY rally. Furthermore, a modest pullback in the dollar from a fresh 20-year high continues to support the modest recovery move.
For its part, dollar decline lacks obvious fundamental catalyst and is likely to remain limited amid a tougher stance taken by the Federal Reserve. In fact, The Fed raised interest rates another 75 basis points on Wednesday and signaled more aggressive rate hikes at its next meetings.. This coupled with the risk aversion state should act as a tailwind for the safe-haven dollar and cap GBP/USD.
Traders may also prefer to stay on the sidelines and wait for the BoE’s monetary policy update before opening aggressive positions. The UK central bank is expected to redouble its efforts to curb inflation, raising rates by 75 basis points on Thursday.. Investors will also be watching the accompanying monetary policy statement for clues on future rate hikes amid growing recession risks, which will weigh on sterling.
GBP/USD technical levels
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
