GBP/USD climbs amid optimistic BoE’s UK economic outlook

The Pound Sterling rose against the US Dollar in the mid-North American session as US traders got back to their offices. Reasons like the Bank of England (BoE) Governor Andrew Bailey stating that Britain’s economy could fare better than expected propelled the GBP/USD pair up. At the time of writing, the major exchanges hands at 1.2643, up 0.40%.

GBP/USD gains on positive economic signals from BoE officials, eyes Fed minutes

UK’s economic calendar featured BoE speakers. BoE’s Michael Broadbent said the question has moved on from the degree of policy restrictiveness to its duration. He added that more persistent components of inflation “may have peaked” while not ruling out policy easing at some time.

The BoE Governor Andrew Baily commented that the economy is recovering, highlighting that it is at full employment. He added, “We don’t need inflation to be back at target before cutting rates,” while noting that he can’t say when the BoE will ease policy.

At the same time, BoE’s member Swati Dhingra, which voted to cut rates, noted that downside risks to the UK economy are substantial due to the restrictiveness of the economy and added that consumption is still very weak.

A Reuters poll revealed the Bank of England would cut the Bank Rate to 4.75% in Q3 2024, while the UK economy is expected to expand by 0.3% in 2024 and 1.1% in 2025.

In the US, the economic docket remains light, though the US Conference Board is expected to reveal the Leading Index for January, which is estimated to plunge by 0.3% MoM. On Wednesday, the schedule will gather pace, with the release of the latest Federal Open Market Committee (FOMC) minutes and Fed speakers crossing the wires.

GBP/USD Price Analysis: Technical outlook

The GBP/USD is still range-bound but has edged towards the 50-day moving average (DMA) At 1.2671, the peak of that area, but retraced. However, a daily close above the February 19 high of 1.2629 could open the door for further gains. The next resistance would be the 50-DMA and 1.2700. Conversely, if sellers push the exchange rate below 1.2600, look for a fall to the 200-DMA at 1.2563.