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The pair could have a bearish breakout as sellers target the important support at 1.1900.
- Sell the GBP/USD pair and set a take-profit at 1.1900.
- Add a stop-loss at 1.2100.
- Timeline: 1-2 days.
- Set a buy-stop at 1.2055 and a take-profit at 1.2150.
- Add a stop-loss at 1.1955.
The British pound remained in a tight range after the latest statement by Bank of England’s (BoE) governor, Andrew Bailey. The GBP/USD pair was trading at 1.200 on Thursday, which was a few points below this week’s high of 1.2145.
The BoE has been one of the most hawkish central banks in the developed world, even as concerns about the economy have remained. It has moved interest rates to 4% from the pandemic-era low of almost zero. In its first meeting of the year in February, the bank decided to hike interest rates by 50 basis points in a bid to fight inflation, which remains above 10%.
In a statement on Wednesday, Andrew Bailey, the BoE head said that there were early signs that interest rate hikes have peaked. He also cautioned that the bank will not hesitate to continue hiking interest rates if inflation remains stubbornly high. He said:
“Some further increase in Bank rate may turn out to be appropriate but nothing is decided. The incoming data will add to the overall picture of the economy and the outlook for inflation, and that will inform our policy decisions.”
The GBP/USD is also wavering after the mixed economic numbers from the US and UK. On Wednesday, data by Nationwide showed that the house price index (HPI) declined by 0.5% on a month-on-month basis and by 1.1% on an annual basis. Analysts caution that prices will continue falling in the coming months.
Additional data showd that the country’s manufacturing PMI rose to 49.3 in February. This is a sign that the PMI will continue improving. In the US, the closely-watched ISM manufacturing figure also made a modest improvement even as it remained below the expansionary level of 50.
The GBP/USD pair has moved sideways in the past few days. In this period, it has remained between the important resistance and support levels at 1.2145 and 1.1917. It has also moved slightly below the 50-day moving average. The MACD and the Relative Strength Index (RSI) are at their neutral levels.
Therefore, the pair will likely remain in this consolidation phase as investors wait for the BoE and Fed cues. The pair could have a bearish breakout as sellers target the important support at 1.1900.
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