GBP/USD extends the rally above 1.2550, eyes on BoE rate decision
06.05.2024, 23:24

GBP/USD extends the rally above 1.2550, eyes on BoE rate decision

  • GBP/USD holds positive ground around 1.2560 on the softer USD on Tuesday. 
  • Slower US job growth has triggered speculation that the Fed will cut the interest rate this year. 
  • The BoE is expected to hold rates at 5.25% for the fifth time in a row on Thursday. 

The GBP/USD pair trades in positive territory for the fifth consecutive day near 1.2560 during the Asian session on Tuesday. The weaker US Dollar (USD) provides some support to the major pair. The Bank of England (BoE) interest rate decision on Thursday will be in the spotlight, with no change in rate expected. 

Investors increased their bets that the US Federal Reserve will cut the interest rate this year after US employment data last week slowed more than expected in April. Fedspeak this week might offer some hints about future monetary policy. On Monday, Richmond Fed President Thomas Barkin said that the current interest rate level should cool the economy enough to bring down inflation to the 2% target, with the strength of the job market giving officials time to gain confidence that inflation will fall. 

Meanwhile, New York Fed President John Williams stated that while rate cuts would happen, monetary policy was currently in a very good place. Later in the day, Fed Bank of Minneapolis President Neel Kashkari is set to speak. The dovish tone of Fed officials might drag the Greenback lower and create a tailwind for the GBP/USD pair for the time being. According to LSEG's rate probability app, financial markets have priced in rate cuts worth 46 basis points (bps) from the Fed by the end of 2024, with the first cut expected in September or November. 

On the other hand, the BoE is expected to hold rates at 5.25% at its May meeting on Thursday. Traders will closely monitor about possible timescale for rate cuts and the BoE’s guidance on interest rates. Nonetheless, the dovish comments from the BoE Governor Andrew Bailey and Deputy Governor Dave Ramsden in April triggered speculation that the easing cycle of the BoE may be closer to the European Central Bank (ECB) than to the Fed. The BoE's Bailey noted that he is confident that headline inflation will return to the desired rate of 2% in April. The dovish stance of the UK central bank might weigh on the Pound Sterling and cap the downside of the pair. 

GBP/USD

Overview
Today last price 1.2563
Today Daily Change 0.0016
Today Daily Change % 0.13
Today daily open 1.2547
 
Trends
Daily SMA20 1.2497
Daily SMA50 1.2613
Daily SMA100 1.2645
Daily SMA200 1.2549
 
Levels
Previous Daily High 1.2635
Previous Daily Low 1.253
Previous Weekly High 1.2635
Previous Weekly Low 1.2466
Previous Monthly High 1.2709
Previous Monthly Low 1.23
Daily Fibonacci 38.2% 1.2595
Daily Fibonacci 61.8% 1.257
Daily Pivot Point S1 1.2506
Daily Pivot Point S2 1.2465
Daily Pivot Point S3 1.2401
Daily Pivot Point R1 1.2612
Daily Pivot Point R2 1.2676
Daily Pivot Point R3 1.2717

 

 

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