GBP/USD Cautious after Thursday’s BoE-Fueled Plunge, Ahead of US NFPs
GBP/USD Analysis
The Bank of England (BoE) hiked rates by 25 basis points, to 1%, on Thursday as expected, making the fourth consecutive adjustment. It also pointed to more rate increases, noting that "most members of the Committee judge that some degree of further tightening in monetary policy may still be appropriate in the coming months". [1]
Officials appeared to be quite downbeat in regards to the economic outlook, offering gloomy projections. They now see a shocking inflation surge to over 10% in the last quarter of the year and GDP to contract in that same period.
Governor Bailey refrained from using the word "stagflation" during the press conference, as he believes it is "not very well defined" [2], but based on the bank's forecasts, it looks like this is where the UK economy is headed to.
The combination of these factors makes their job extremely difficult, since high consumer prices create the need for more interest rate increases, but economic slowdown does not leave room for such action.
GBP/USD shed more than 250 pips on Thursday and posted its worst day in more than two years, weighed by the central bank's decision and the downbeat outlook. It is now exposed to mid-1.2200, although fresh catalyst may be required for a breach of 1.2079-69.
The British Pound tries to take a breath today and it may be able to react higher, but a significant change is sentiment would be required to push through 1.2492-1.2500 and look to 1.2637.
Caution is needed, since today's economic calendar includes the closely watched US employment report, which has the potential to cause volatility and determine the pair's trajectory.
Nikos Tzabouras
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. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
References
| Retrieved 06 May 2022 https://www.bankofengland.co.uk/monetary-policy-report/2022/may-2022 | |
| Retrieved 19 Apr 2026 https://www.youtube.com/watch |
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