GBP/USD stays in the green, at around 1.2200 post-BoE’s decision, dovish Fed hold

The GBP/USD continues to trade in positive territory after erasing Wednesday’s losses due to the US Federal Reserve holding rates unchanged, but speculators are not expecting further tightening by Jerome Powell and Co. Alongside that, the Bank of England (BoE) followed suit, keeping rates at a 15-year high, maintaining the major exchanging hands at around 1.2200, gaining nearly 0.40%.

GBP/USD in positive territory as Federal Reserve holds rates unchanged and Bank of England maintains 15-year high rates

On Wednesday, the Federal Reserve kept the federal funds rate at the 5.25%-5.50% range for the second straight meeting after officials commented the US central bank could be patient. Fed policymakers acknowledged the labor market remains tight, with growth above trend and inflation high. Nevertheless, their decision was perceived as dovish; as speculations grow, the Fed is done raising rates.

On the UK front, the Bank of England voted 6-3 to hold rates unchanged at 5.25%, sponsoring a rally on the GBP/USD toward 1.2222, but has faded as the pair dipped 20 pips toward the 1.22 figure. In its monetary policy statement, the BoE mentioned that rates would remain restrictive for a long period. In his press conference, BoE Governor Andrew Bailey commented that inflation is too high, that further rate hikes could be needed, and disregarded rate cuts.

Aside from this, data-wise, Factory Orders in the United States (US) jumped surprisingly 2.8%, compared to August’s 1% and expectations for a 2.4% rise. On the labor market front, unemployment claims rose above estimates and the prior reading, suggesting that although it remains hot, the jobs market begins to cool down.

Given the backdrop, GBP/USD traders turn to Friday's US Nonfarm Payrolls October report. If figures show the jobs market remains hot, GBP buyers would be in a difficult position due to the extent of the major’s rally since Wednesday. The pair climbed more than 120 pips from Wednesday’s lows to current exchange rates.

GBP/USD Price Analysis: Technical outlook

The daily chart shows the downtrend remaining intact amid the formation of a descending triangle. For GBP/USD buyers to shift the bias to neutral, they must clear the top of the triangle at around 1.2225/1.2230, followed by ta break of key resistance levels. The next resistance would be the October 24 high at 1.2288 before testing the 50-day moving average (DMA) at 1.2308. Conversely, if sellers regain control, they must drag prices toward the bottom of the triangle at 1.2100. Once cleared, the next support emerges at 1.2037, the October 4 swing low.