GBP/USD gains momentum, nears two-month highs, amid hawkish BoE comments

• GBP/USD continues its upward trajectory in the North American session, currently trading at 1.2529, marking a 0.20% gain.
• Hawkish comments from Bank of England (BoE) officials, including Governor Andrew Bailey, have fueled the pound's rise.
• GBP/USD traders eye the release of the Federal Reserve's latest monetary policy meeting minutes, which is likely to indicate a data-dependent approach to future policy decisions.

The GBP/USD extended its gains during the North American session, after hitting a daily low of 1.2446, though some hawkish remarks by officials of the Bank of England (BoE) sponsored a leg-up back above the 1.2500. At the time of writing, the pair is trading at 1.2529, gaining 0.20%, slightly below the two-month high of 1.2559.

The major traders above 1.2500 boosted by BoE’s officials comments, soft US economic data

The BoE Governor Andrew Bailey appeared in the parliament’s Treasury Select Committee and states that inflation was on track to the 2% goal, though emphasized risks are tilted to the upside. He added its “far too early to be thinking about rate cuts,” even though swaps markets have priced rate cuts for the next year. During the same hearing, Catherine Mann of the hawkish members of the BoE said she favors additional tightening to ensure inflation returns to target.

GBP/USD traders eye the release of the Autumn Statement, where Chancellor Jeremy Hunt is expected to present changes to fiscal policy. Hunt said “At my Autumn Statement tomorrow, I will focus on how we boost business investment and get people back into work to deliver the growth our country needs. We met our pledge to halve inflation, but we must keep on supporting the Bank of England to drive inflation down to 2%. That means being responsible with the nation’s finances.”

Across the pond, the US economy continues to show signs of resilience, except for the housing market. US Existing Home Sales dropped -4.1% in October, the lowest level since November 2022, from 3.95 million to 3.79 million. Later, the US Federal Reserve is expected to release the latest monetary policy meeting minutes, which are expected to show the US central bank approach would be data-dependent.

Meanwhile, money market futures expect the Fed to slash rates by 100 basis points in 2024, which would witness the federal funds rate dropping from 5.50% to 4.50%. Consequently, US bond yields dropped as investors did not expect additional rate hikes. That weighed on the US Dollar, which, according to the US Dollar Index (DXY), has fallen 2.50% since November 13.

Therefore, the GBP/USD bias remains tilted to the upside, but a hawkish tilt by the Fed could open the door for a correction, with sellers eyeing the 200-DMA.

GBP/USD Price Analysis: Technical outlook

The GBP/USD printed a three-day new high but unless it achieves a daily close above the latest swing high achieved on September 11 at 1.2548, risks for a pullback, remain. If the major achieves the previously mentioned, the next resistance would be the 1.2600 figure, followed by the August 30 high at 1.2746. On the flip side, the first support seen is 1.2500. A breach of the latter would expose the 200-day moving average (DMA) at 1.2446.