GBP/USD Cautious at Key Tech Levels after Another BoE Hike
GBP/USD Analysis
The Bank of England delivered its twelfth straight increase on Thursday and even though it still expects inflation to fall sharply, it actually raised its forecast. It also upgraded the GDP projections, not seeing a recession anymore [1]. Today's preliminary data showed an 0.1% expansion q/q in Q1, same as in the previous quarter, while industrial production rose to 0.7% m/m in March and the highest in nearly a year.
The central bank remained non-committal in regards to future moves, but the above revisions keep the door open to more hikes ahead. Speaking to Bloomberg after the decision, governor Bailey said that officials we'll be "shaped by the evidence", adding that they are "approaching" a point when they should be able to "rest". [2]
GBP/USD fell yesterday, but this was probably not so much a reaction to the BoE, but the result of broader USD demand at the time. The USDOLLAR got some risk-off flows, as regional US bank PacWest disclosed a 9.5% decline in deposits last week [3] and the US debt-ceiling talks have not yielded any results so far, ahead of the estimated early-June deadline.
This creates risk for a drop below the EMA200 that would expose it to 1.2290-40, but fresh catalyst would likely be needed for that and sustained weakness below the daily Ichimokou Cloud does not look easy, given the current monetary policy differential.
The US Fed hinted to a pause and markets expect rate cuts this year, viewing this week's moderation in consumer and factory gate inflation, as well as the increase in jobless claims, as supportive of a less aggressive stance. The BoE did not offer guidance, but its GDP/Inflation forecasts and the actual data, offer justification for further tightening.
As long as it can defend the EMA200, the upside bias remains intact and GBP/USD has the ability to set fresh 2023 (1.2680), although further advance towards 1.2948 does not look easy.
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 12 May 2023 https://www.bankofengland.co.uk/monetary-policy-report/2023/may-2023 | |
| Retrieved 12 May 2023 https://www.bloomberg.com/news/videos/2023-05-11/boe-s-bailey-on-rate-decision-inflation-mortgages-video | |
| Retrieved 18 Apr 2026 https://www.sec.gov/ix |
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.