[ad_1]
Investors still prefer to buy the US dollar due to strong expectations for the future of US interest rate hikes. Accordingly, the price of the GBP/USD currency pair settles around its recent losses, which reached the 1.2411 support level. This is its lowest since July 2020, and settled around the 1.2520 level at the time of writing the analysis. This is a time when the sterling is looking for strength factors to recover and compensate for its recent losses. The currency pair is on an important date this week, as the US Federal Reserve and the Bank of England will announce an update of their monetary policy amid expectations of an interest rate hike.
In general, interest rate expectations are important for currencies, especially in a world where global central banks are racing to raise interest rates in the face of rising inflation. The best example of how this affects currencies is with regards to the US dollar, which has risen sharply in recent months thanks to the high number of interest rate increases likely to be introduced by the US Federal Reserve. The market expects 240 basis points of hikes from the Fed through the remainder of 2022 and 145 basis points from the Bank of England. Its price is expected to rise more than 80 points from the European Central Bank.
On the outlook: Analysts at ABN AMRO said they cut their forecast for the British pound on the belief that the Bank of England is nearing completion of its rate hike. The outlook from the Dutch global investment bank and lender comes just days before the Bank of England monetary policy meeting in May when interest rates are expected to rise by another 25 basis points.
According to the technical analysis of the currency pair: On the daily chart below, it seems clear that the bears continue to dominate the movements and performance of the GBP/USD currency pair, and stability below the 1.2500 support may push the currency pair towards stronger bearish levels, and the closest to it after that are 1.2395 and 1.2200, respectively. These levels are sufficient to push the technical indicators towards oversold levels. On the other hand, the psychological resistance 1.3000 must be broken to break the current trend.
The sterling dollar currency pair will interact today with the performance of global financial markets and the reaction from the announcement of the British Industrial PMI reading, then the announcement of US job opportunities and factory orders.
[ad_2]