Inflation in the UK has surprised on the upside multiple times and the Bank of England has continued its monetary tightening that started back in December 2021. The latest data showed that core CPI accelerated 7.1% y/y in May and the highest in more than thirty years. At the same time, the labor market remains tight with elevated wages, which are "unsustainable" according to Governor Bailey's comments on Sky News. 
The Bank of England has been chasing inflation and in an effort to regain control of the situation, it delivered an aggressive 0.25% rate increase last week , reaccelerating the pace tightening after two straight smaller mover.
The strong inflation and labor data and BoE's sustained rate increases have been a source of strength for the British Pound. However, the latest forceful action pushed it lower and to its first losing week of the month, as it sparked concerns over the impact on economic activity and a potential mortgage crisis.
GBP/USD starts the current week in a subdued manner, which creates scope for further decline towards the EMA200 (1.2580-70), but the daily Ichimokou Cloud follows right below and 1.2273 looks distant.
Despite the negative reaction to the BoE's latest decision, sustained weakness may be hard to justify given prospects for more monetary firming. Bulls are in control and have the ability to set fresh 2023 highs towards 1.2948, but we are cautious around further advance.
The monetary policy differential is a bit vague at this point. The BoE reaccelerated the pace of tightening and although it did not commit to next steps, it is likely to deliver more hikes given the persistent inflation. The US Fed on the other hand paused, but its updated projections point to addittional 50 basis points worth of hikes this year. 
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
Retrieved 25 Jun 2023 https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2023/june-2023
Retrieved 03 Mar 2024 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20230614.htm