The Pound Sterling (GBP) has made a strong recovery this week, crossing the key 1.3200 level against the US Dollar (USD). Despite some initial setbacks, GBP/USD remains on track for further gains as the Dollar weakens.
GBP/USD Poised for More Upside
The recent rally in GBP/USD can be attributed to the Dollar’s bearish trend, fueled by expectations of an aggressive interest-rate cut by the Federal Reserve. While the Fed’s dovish stance has put pressure on the Dollar, the Bank of England (BoE) has taken a more cautious approach to rate cuts.
BoE’s Inflation Concerns
BoE Governor Andrew Bailey has expressed concerns about inflation persistence and the impact of global economic conditions on the UK economy. While businesses anticipate a modest increase in selling prices, wage growth remains stable, posing a dilemma for BoE policymakers.
What’s Next for GBP?
Looking ahead, GBP’s performance will be closely tied to key UK economic releases, including inflation and GDP data. Technical analysis suggests that GBP/USD could face resistance at 1.3266, with support at 1.3087 and 1.2900.
Analysis and Conclusion
The recent surge in the Pound Sterling against the US Dollar highlights the impact of central bank policies on currency movements. As the Fed signals a more dovish approach, the BoE’s cautious stance has led to a more stable outlook for GBP. Investors should pay close attention to upcoming economic data releases to gauge the future direction of GBP/USD.