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MENAFN- Daily Forex)
The recent selloffs experienced by the GBP/USD currency pair did not take it out of the upward channel that was recently formed and supported the pair's move towards the 1.3015 resistance level, the highest for the pair in more than four months. The recent selling losses did not exceed the 1.2888 level before closing the week's trading stable around the 1.2916 level. As we mentioned before, the 1.3000 psychological resistance will remain the most important for bulls to control and prepare for stronger upward breakouts.
Bank of England Cautious in Making Any Changes
Last week, the Bank of England kept the main interest rate in Britain unchanged at 4.50%, despite weak British economic growth and the country facing further uncertainty in light of the tariff policies approved by the Trump administration in the United States. In general, the decision of the nine-member Monetary Policy Committee was widely expected and came a day after the US Federal Reserve kept interest rates unchanged.
The meeting minutes showed that eight members voted to keep the policy unchanged, with one member supporting a quarter-percentage-point cut. The interest rate-setting committee reduced the Bank of England's main interest rate from its 16-year high of 5.25% by a quarter-percentage-point on three occasions since last August, the most recent being in February, after inflation fell from its multi-decade highs, which exceeded 10%, reached in the wake of the sharp rise in energy prices following Russia's full-scale invasion of Ukraine in early 2022.
However, UK inflation, at 3%, remains above the Bank's 2% target and is expected to rise further in the coming months, even without taking into account any tariffs imposed by the Trump administration. Many economists believe it could rise to 4% in the coming months, as companies raise prices due to the large increase in the minimum wage and higher payroll taxes. Bank of England Governor Andrew Bailey stated, "There is considerable economic uncertainty at the moment. We continue to believe that interest rates are on a gradual downward trajectory, but we have kept them at 4.5% so far."
In general, if policymakers continue their recent gradual approach, another cut is likely in May, when they will see the bank's latest economic forecasts. Bailey added that rate-setters "will closely monitor the development of global and domestic economies" and that whatever happens, "it is our duty to ensure that inflation remains low and stable."
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The Pound Sterling is still in a strong and good position compared to other European currencies, as Britain avoiding US tariffs will support the Pound's gains against other major currencies.
The British economy, the sixth largest in the world, achieved modest growth of 0.1% in the last quarter, a very disappointing result for the new Labor Party government, which made boosting growth its primary economic policy. Since the global financial crisis in 2008-2009, British economic growth has performed significantly below its long-term average.
EURUSD Chart by TradingViewTechnical Analysis for the GBP/USD pair today:
According to the daily chart performance, and as we mentioned before, the 1.3000 psychological resistance will remain the most important for the upward reversal of the GBP/USD pair, which is closest to the level. Technically, the current upward trend will not be breached without the bears moving the GBP/USD pair towards the 1.2860 and 1.2745 support levels, respectively. So far, the direction of the technical indicators, the RSI and MACD, is upward. The GBP/USD pair will react today to the announcement of the PMI readings for the manufacturing and services sectors for both Britain and the United States, followed by new statements from the Governor of the Bank of England. Not to mention the extent of investors' risk appetite.
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