The British pound sterling is facing a steady decline against the US dollar, as the GBP/USD pair is moving towards 1.2848. The pressure from the USD rate is a major contributing factor to this trend. However, the upcoming Bank of England meeting and its decision on interest rates are also playing a significant role in investor sentiment.
There is speculation in the market that the Bank of England may lower the interest rate from 5.25% to 5.00% in the current meeting. This potential move is supported by the inflationary environment and the state of the employment market in the UK. The probability of a rate cut is currently estimated at 65%, suggesting a high likelihood of this adjustment taking place.
While an early move towards monetary policy easing is on the cards, the Bank of England is expected to adopt a cautious approach. The regulator may not lower the rate rapidly and will only act if it is fully confident about the economic conditions. This conservative stance is likely to have already been factored into GBP quotes, but the details provided in the BoE’s accompanying statement will directly influence future movements in GBP/USD pair.
On the technical front, the H4 chart of GBP/USD indicates a decline wave to 1.2820, followed by a correction to 1.2867. The market is currently in a downward movement towards 1.2772, with the possibility of a correction to 1.2870 before a new decline wave to 1.2611. The MACD indicator supports this scenario with a signal line below the zero mark pointing downwards.
In the short term, the H1 chart of GBP/USD suggests a correction wave towards 1.2867, followed by a downward wave to 1.2772. After this level is reached, a new correction wave towards 1.2870 is anticipated, with a subsequent decline wave to 1.2770. The Stochastic oscillator confirms this outlook, with the signal line positioned below 50 and continuing to decline towards 20.
Investors and traders are advised to closely monitor the Bank of England’s statement for any indications of future policy direction. The central bank’s stance will be crucial in determining the short to medium-term trajectory of the GBP/USD pair. By staying informed about the BoE’s decision and the technical analysis of GBP/USD, market participants can make informed decisions regarding their trading strategies.