GBP price, news and analysis:
- GBP / USD continues its modest rise, which started two weeks ago, and may soon hit a psychologically significant level of 1.40.
- However, this depends on the Bank of England’s Monetary Policy Committee sounding reluctant to announce its latest decisions on Thursday.
GBP / USD is waiting for the Bank of England
GBP/USD continues to make modest progress, extending the rise that began on July 20, when the pair reached a recent low of 1.3572. The clear short-term target remains at a psychologically significant level of 1.40, and Thursday’s announcements by the Bank of England’s Monetary Policy Committee could be a catalyst for achieving this level and possibly a breach.
When the MPC reports, the focus will be on whether it abandons any hint of tightening monetary policy, either by reducing asset purchases or even higher UK interest rates. Note that this will not really change any of your settings tomorrow, but the markets may start to warn that a tightening of the aid program is currently being considered – a positive for GBP / USD.
GBP / USD price chart, hourly schedule (July 20 – August 4, 2021)
Source: IG (click for larger image)
On the downside, while the BoE is driving stronger inflation and growth in the UK, it is supporting the downward trend of 1.3840 shown in the chart above, which used to be a resistance and now supports the price.
As regards US dollar, this half of the equation is also relatively stable on Wednesday, traders expect the US labor market report on Friday. Forecasters surveyed by financial news agencies forecast an increase of 880,000 non-agricultural payrolls in July, compared to the previous 850,000.
– Written by Martin Essex, analyst
Feel free to contact me on Twitter @MartinSEssex