The GBP/USD currency pair traded in positive territory around 1.3430 during early European trading hours on Friday, supported by political developments in the UK and expectations of further Bank of England (BoE) interest rate hikes [1]. The British Pound has been underpinned by the UK government leadership transition, with Andy Burnham's path to becoming the next UK prime minister appearing certain after 322 out of 403 Labour MPs formally nominated him to be the next party leader, according to Bloomberg. Burnham is expected to formally assume the role of Prime Minister on July 20 [1].
Market participants have increased their bets on additional BoE interest rate hikes, particularly amid escalating tensions between the US and Iran. According to Reuters, markets are now fully pricing in a 25 basis points BoE rate increase by year-end, most likely in December [1].
From a technical perspective, GBP/USD maintains a modest bullish bias, trading above the 100-day simple moving average (SMA) and the Bollinger Bands’ 20-day SMA. The pair is edging higher toward the upper Bollinger band near 1.3475, with a daily close above this level potentially opening the way for the April 15 high of 1.3579. Immediate support is seen at the 100-day SMA at 1.3405, with further downside levels at the Bollinger midline near 1.3305 and the lower band around 1.3130 [1].
No analyst opinions or additional forward-looking statements beyond the market's rate hike expectations were provided in the article.
CONCLUSION
GBP/USD has edged higher above 1.3400, buoyed by the UK political transition and expectations of a BoE rate hike by year-end. Technical indicators suggest a continued bullish outlook, with key resistance and support levels identified. Market sentiment remains positive as traders anticipate further policy tightening from the Bank of England.