GBP/USD: Flirting with 1.2300 ahead of the Bank of England’s decision

• Bank of England to hike rates by 50 bps, fresh forecasts coming up.
• Concerns about a global economic setback weighed on US indexes.
• GBP/USD trades near its recent multi-month high of 1.2343.

The GBP/USD pair peaked at 1.2321 after Wall Street’s opening but trimmed intraday gains and hovers at around 1.2280. The pair ends the week flat, as demand for the US Dollar remained subdued.

At the time being, US indexes trade mixed, with the Dow Jones Industrial Average and the S&P 500 in the red, but the Nasdaq Composite up measly 12 points. Generally better-than-anticipated US macroeconomic data has lifted concerns the US Federal Reserve will go for an aggressive 75 bps hike, which will end up raising the risk of a longer and steeper recession in 2023.

The week ahead will bring the monetary policy decisions of the US Federal Reserve, the European Central Bank, and more relevantly for the British Pound, the Bank of England.  Market participants have fully priced in a 50 bps, and little surprises are expected there. However, investors are unaware of what English policymakers have on the docket for 2023.

The Bank of England acknowledged the country is in a recession and expects the setback to extend well into 2023. Fresh forecasts on growth and inflation will be key for the Pound’s direction.