Breaking News: Pound Sterling Faces Volatility After BoE Governor’s Forecast
The Pound Sterling (GBP) experienced a whirlwind of activity on Wednesday following Bank of England (BoE) Governor Andrew Bailey’s prediction of four interest-rate cuts in 2025. This forecast, made in an interview with the Financial Times (FT), sent shockwaves through the market, driving selling pressure against all major currency pairs.
BoE Meeting Expectations
- Traders anticipate the BoE to maintain interest rates at 4.75% during this month’s meeting.
- Investors are eagerly awaiting a series of US economic data releases and Fed Chairman Powell’s speech for further insights.
Andrew Bailey emphasized the gradual lowering of interest rates to combat inflation, stating that the “disinflation process is well embedded.” Despite uncertainties surrounding US tariffs and their impact on UK inflation, Bailey remains committed to implementing necessary measures.
Market Analysis and Expectations
Market expectations suggest the BoE will hold interest rates steady, driven by concerns over persistent UK inflation. Recent data revealed an increase in core Consumer Price Index (CPI) and service inflation, influencing the outlook for interest rate policy.
Daily Market Movers: Pound Sterling Dynamics Against US Dollar
- The GBP faces consolidation against the USD, with fluctuations near 1.2700 amidst selling pressure.
- Investor focus shifts to US Nonfarm Payrolls (NFP) data and Fed policies, with expectations for continued interest rate adjustments.
- Key economic data releases include US ADP Employment Change and ISM Services PMI, impacting market sentiment and currency movements.
Technical Analysis: Pound Sterling Performance
The GBP/USD pair shows a bearish outlook, with a recent drop from the 20-day EMA signaling further potential declines. Short-to-long-term EMAs are sloping downwards, indicating a negative trend.
While the RSI shows signs of a rebound, downside pressure persists. Support levels are anticipated near the upward trendline at 1.2500, with resistance at the 200-day EMA around 1.2830.
Pound Sterling FAQs
Here are some key insights into the Pound Sterling and factors influencing its value:
- The GBP is the oldest currency, accounting for 12% of global FX transactions.
- Monetary policy decisions by the BoE play a crucial role in GBP valuation.
- Economic indicators such as GDP, PMIs, and employment data impact GBP performance.
- The Trade Balance indicator reflects the country’s economic health and affects GBP strength.