GBP/USD Steadies After Monday’s Slump, Mr Bailey’s Comments
Governor Bailey Growth Warning
The governor of the Bank of England (BoE) expects "growth and demand to slow" due to the shock from energy prices this year, which "will be larger than any single year in the 1970s", as per his Bruguel speech on Monday. [1]
The BoE had delivered its third rate hike in a row earlier in the month in the face of surging inflation, with last week's data showing a 6.2% year-over-year jump in February's CPI.
The decision however was seen as dovish, since the bank changed its guidance [2]. It said that further modest tightening in monetary policy "may be appropriate" in the coming months, from February's more hawkish "is likely to be appropriate" reference.
Mr Bailey commented yesterday that this change in language "is a reflection of the level of the level of uncertainty and the risks we face".
GBP/USD Analysis
Mr Bailey's comments and US Dollar strength weighed on the pair yesterday, leading to a roughly 100-pips slump, but today it tries to find support. This may give it the opportunity to retake 1.3159-64, but we remain cautious about its prospects of bigger rebound towards and beyond 1.3270-1.3300.
This area contains the 200EMA and the 38.2% Fibonacci of the drop form this year's high's to the lows, which the British Pound had rejected last week. As such, bears retain control and can push back towards 1.2999-80, but it may still be early for a larger decline that would threaten 1.2829.
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.
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