GBP/USD builds on expectation as BoE to maintain restrictive policy, trades near 1.2740
GBP/USD moves on an upward trajectory for the second successive session on Tuesday, inching higher to near 1.2740 during the Asian trading hours. The Bank of England (BoE) is expected to maintain its current restrictive policy stance in the upcoming meeting. This sentiment is supported by a Reuters poll in which economists anticipate the Bank of England to keep the policy rate unchanged at 5.25% during the February meeting. The expectations of a status quo in monetary policy contribute to the positive performance of the Pound Sterling (GBP), which in turn, underpins the GBP/USD pair.
The lackluster Retail Sales data for December from the United Kingdom (UK) on Friday likely contributed to the downward pressure on the British Pound (GBP). The substantial decline in UK Retail Sales signals deep economic challenges, coupled with heightened price pressures. The gloomy UK economy raises concerns about the potential for a technical recession. In this challenging economic context, policymakers at the Bank of England face a dilemma in determining the appropriate course of action. Read more...
GBP/USD holds above 1.2700 ahead of UK, US PMI data
The GBP/USD pair holds above the 1.2700 psychological mark during the early Asian session on Tuesday. The rebound of the major pair is supported by an improved risk appetite. Investors will keep an eye on the preliminary UK S&P Global PMI for January on Wednesday, which is expected to remain upbeat. At press time, GBP/USD is trading at 1.2713, gaining 0.04% on the day.
The restrictive monetary policy stance of the Bank of England provides some support to the Pound Sterling (GBP). All 70 economists who participated in the Reuters poll said that they anticipate the Bank of England (BoE) to hold the policy rate unchanged at 5.25% at its policy meeting on February 1. Nonetheless, the BoE is expected to cut the rate to 5% in Q2 of 2024 as inflation is projected to drop below the target, faster than the Q3 cut from the December poll. Read more...
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