The GBP/USD currency pair traded flat near 1.3475 during the European session on Thursday, as market participants awaited the Bank of England’s (BoE) monetary policy announcement scheduled for 11:00 GMT. Investors widely expect the BoE to keep interest rates unchanged at 3.75% for the third consecutive meeting, reflecting a cautious stance amid persistent inflation and rising economic risks [1].
Recent economic data showed that the UK’s Consumer Price Index (CPI) for March accelerated to 3.3% year-on-year, up from 3% in February, signaling ongoing inflationary pressures. In response to the evolving economic landscape, Lloyds Banking Group revised its UK GDP growth forecast for the year, halving it to 0.5% from the previously projected 1%. The group also anticipates the UK unemployment rate will rise to 5.6% by the second half of the year, according to The Independent [1].
On the technical front, GBP/USD has remained close to its 20-day Exponential Moving Average (EMA) at 1.3468 for over two weeks, with the Relative Strength Index (RSI) around 52, indicating steady but modestly positive momentum. Key resistance levels are identified at 1.3509, 1.3593, 1.3712, and 1.3864, while immediate support lies at 1.3425, with further downside risk toward 1.3321 and 1.3154 if selling pressure intensifies [1].
Meanwhile, the US Dollar has remained broadly firm following the Federal Reserve’s recent policy announcement, as expectations for a Fed rate cut this year have diminished sharply. The CME FedWatch tool shows the probability of a single Fed rate cut in 2024 has dropped to 3.3% from 18.4% the previous day, adding to the cautious tone in currency markets [1].
CONCLUSION
GBP/USD is consolidating ahead of the BoE’s policy decision, with markets expecting rates to remain unchanged amid persistent inflation and a weaker UK growth outlook. The firm US Dollar and reduced Fed rate cut expectations are also influencing the pair’s stability. Investors are closely watching the BoE’s stance for further direction.