The GBP/USD currency pair rallied by 0.96% on Thursday, closing near the 1.3600 level after a volatile session that saw it dip to 1.3455 in the European morning before rebounding sharply during the New York afternoon. The session's price action left a long lower wick on the daily chart, indicating strong buying interest near the lows and stalling just below the 1.3600 round figure into the late session [1].
The Bank of England (BoE) maintained its main Bank Rate at 3.75% in an 8-1 vote, with chief economist Huw Pill as the sole dissenter advocating for a 25 basis point hike. During the press conference, Governor Andrew Bailey emphasized concerns about second-round inflation risks and signaled that the Monetary Policy Committee (MPC) is prepared to act pre-emptively if energy-driven price pressures begin to affect wages [1].
On the US economic front, the Personal Consumption Expenditures (PCE) Price Index increased by 3.5% year-over-year in March, matching forecasts. However, preliminary Q1 Gross Domestic Product (GDP) growth came in at 2%, which was below the 2.3% consensus, contributing to a softer undertone for the US Dollar during the New York session [1].
Looking ahead, Friday's session will feature the Institute for Supply Management Manufacturing Purchasing Managers Index (ISM Manufacturing PMI), with consensus at 53 and the Prices Paid sub-index forecast at 80, which would indicate persistent cost pressures if confirmed. BoE chief economist Huw Pill is also scheduled to speak during the European morning and may adopt a more hawkish tone than Governor Bailey, given his vote for a rate hike. The UK economic calendar is relatively quiet next week due to a bank holiday and a lack of major domestic releases, while the US will see several key data releases, including ISM Services PMI, ADP Employment Change, and the Non-Farm Payrolls (NFP) report, which is expected to influence the near-term direction for GBP/USD [1].
CONCLUSION
The BoE's decision to hold rates, combined with a softer-than-expected US GDP print, supported a rally in GBP/USD. Market participants are now focused on upcoming US and UK data releases, which are likely to drive the next moves in the currency pair. The overall sentiment is cautiously optimistic, with attention turning to inflation and employment data for further direction.