GBP/USD Extends Bearish Trend Amid BoE Rate Decision

22 mar

The GBP/USD pair faced significant downward pressure on Thursday, mirroring the trajectory of the EUR/USD, and continued to decline on Friday, shedding more than 0.5% to dip below the 1.2600 level. As of the time of writing, the pair is hovering around 1.2583, indicating sustained bearish sentiment.

In line with market expectations, the Bank of England (BoE) opted to maintain the bank rate at 5.25%. The policy statement revealed a vote of seven policymakers in favor of holding rates, with one member advocating for a 25 basis point reduction. However, the BoE refrained from providing clear guidance on the timing of any potential policy adjustments.

BoE Governor Andrew Bailey indicated that waiting for inflation to reach 2% before implementing rate cuts may not be necessary. He suggested that markets should anticipate multiple rate cuts throughout the year, expressing confidence that inflation is moving towards the target.

Technically, the GBP/USD pair is nearing a significant support level that has been tested multiple times in the past. Traders are keen to observe any potential reactions in this area before considering new trading opportunities.

Looking ahead, the US economic calendar is relatively quiet, with no major data releases scheduled before the weekend. Federal Reserve Chairman Jerome Powell is set to deliver opening remarks at the Fed Listens event, although significant market impact from his speech is not anticipated.

In summary, the GBP/USD pair remains under bearish pressure following the BoE rate decision, with market participants closely monitoring key support levels and upcoming events for potential trading opportunities.