The British pound sterling is facing a steady decline against the US dollar with the GBP/USD pair trending towards 1.2848. The pressure from the USD rate is evident while investors eagerly await the outcome of today’s Bank of England meeting. Speculation is rife that the BoE will lower the interest rate from 5.25% to 5.00% to address the inflationary environment and the state of the UK employment market. The probability of a rate cut stands at 65%, indicating the likelihood of monetary policy easing.
While an early move towards rate cuts is on the cards, the Bank of England is expected to maintain a cautious approach. The BoE may not lower the rate rapidly and will only act when fully confident about the economic conditions. Any decision made by the BoE today has already been factored into GBP quotes, but the future movements of GBP/USD will be influenced by the details provided in the BoE’s accompanying statement.
On the H4 chart of GBP/USD, the market has seen a decline wave to 1.2820 followed by a correction to 1.2867. The downward movement towards 1.2772 is expected, with a potential correction to 1.2870 before a new decline wave to 1.2611. Technical indicators like the MACD support this scenario. On the H1 chart, a correction wave towards 1.2867 is in progress, with the next downward wave towards 1.2772 expected. A subsequent correction wave to 1.2870 may follow, leading to a new decline wave to 1.2770, as confirmed by the Stochastic oscillator.
Investors and traders are advised to closely monitor the Bank of England’s statement for any indications of future policy direction. This statement will play a crucial role in determining the short to medium-term trajectory of the GBP/USD pair. The BoE’s tone and approach towards interest rates will have a significant impact on the exchange rate movement between the British pound sterling and the US dollar in the coming days.
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