Bullish Sentiment
Bearish Sentiment
The GBP/USD exchange rate felt the impact of increasing geopolitical tensions following the Fed’s interest rate announcement. Currently, it’s at 1.3480, slightly below this month’s peak of 1.3595, as focus shifts to upcoming interest rate choices from the Bank of England (BoE).
Awaiting the Bank of England’s Decision
The pullback of the GBP/USD pair can be attributed to various fluctuating factors, particularly the recent decisions by the Federal Reserve.
During Jerome Powell’s last meeting as chairman, the Fed opted to maintain interest rates at the 3.50% to 3.75% range. Officials signaled that they would keep an eye on economic developments to evaluate the need for rate adjustments this year.
There are growing concerns about inflation rising in the U.S. as energy and food prices climb. Current data indicates fuel prices are on the rise, with gasoline averaging $4.15 per gallon, as reported by AAA. Additionally, food prices may keep increasing due to rising fertilizer costs.
Oil prices surged due to the ongoing closure of the Strait of Hormuz. President Trump indicated in a statement that the U.S. would maintain a blockade on Iran and might consider a limited military action.
The GBP/USD pair will soon respond to the BoE’s interest rate announcement, set to be revealed later today. Economists anticipate that the bank will hold rates steady at 3.75%.
Both the BoE and the Fed face the challenge of navigating stagflation—a situation marked by rising interest rates amid slowing economic growth.
Alongside the BoE’s decision, the U.S. will be releasing its latest GDP and Personal Consumption Expenditures (PCE) report. Analysts expect to see a 2.3% expansion in the economy for the first quarter, following a 0.5% growth in the previous quarter.
Technical Analysis of GBP/USD
The daily chart of the GBP/USD pair reveals that it has been trading within a tight range recently, between support and resistance levels of 1.3475 and 1.3595.
This pair is shaping a bullish flag pattern, which consists of a vertical line combined with a horizontal channel. Moreover, it has surpassed the 50-day exponential moving average (EMA).
Simultaneously, there’s an inverted head-and-shoulders pattern forming, which typically signals a potential bullish breakout towards 1.3600.
