fundamental News - GBP/USD
GBP/USD recovering from previous session losses now trading around 1.36316 amid the initial Asian session on the Super Thursday, after refreshing the monthly low with 1.3609 due to the Fed tapering before a few hours.
Focus now shifts to the Bank of England (BOE) decision scheduled for Thursday.
The BOE will conclude its two-day monetary policy meeting on
Thursday. Analysts expect that the bank will deliver a relatively
hawkish interest rate decision while sounding cautious. Precisely, the
bank will leave its main interest rate unchanged at 0.10%.
Some analysts believe that the central bank will hint that it will
terminate its quantitative easing program before it is scheduled to
expire in December.
These BOE officials argue that continuing the asset purchases will
not help accelerate the economy. Besides, the country is currently
facing challenges that the BOE cannot fix adequately like supply chain
challenges and labour shortages.
Other BOE officials will recommend maintaining the asset purchases until the end in a bid to support the country bounce back.
The BOE decision comes at a time when the UK economy is showing
signs of a strong recovery. The unemployment rate has declined while
inflation has risen to more than 3%. Therefore, some policymakers will
likely say that the current jump in consumer prices
was transitory. In a recent statement, Andrew Bailey said that there
were two camps in the committee.
The GBP/USD is also reacting to the Federal Reserve decision. The
central bank decided to leave its interest rates unchanged between 0%
and 0.25%. The bank will also continue with its $120 billion per month
quantitative easing (QE) policy.
However, the policy members hinted that it will start tapering in
the coming months. The dot plot showed that the bank expects that
interest rates will have 6 to 7 rate hikes by 2024.
Technical analysis
GBP/USD broke below the support 0f 1.36400 falling as low as
1.36087, a failed push above the 20-SMA 1.36594 will keep bearish
momentum towards the major trendline support since 2019 at 1.35700.