GBP/USD Price Analysis – March 23, 2023
Daily Price Outlook
The GBP/USD pair is currently trading up 0.52% at 1.2328. The currency pair has surged to seven-week highs due to a higher UK Consumer Price Index (CPI), which reaffirms a potential rate hike from the Bank of England (BoE). The USD has declined due to the Federal Reserve's dovish interest rate policy.
Fed Raises Rates, But Takes Dovish Stance
On Wednesday, the Federal Reserve increased its benchmark funds rate by 25 basis points to the range of 4.75% - 5.00%. However, it dropped its language about ongoing increases in favor of monitoring how the banking crisis affects the economy.
Fed Chair Jerome Powell reiterated the FOMC's commitment to getting inflation back to its 2% target. However, the market assumed that the central bank's terminal rate was near, despite the Fed increasing interest rates as expected and reaffirming its inflation control commitment.
The Fed raised interest rates while softening its tone towards tightening monetary policy, indicating that it may eventually consider halting to avoid further economic hardship.
This caused the value of the dollar against a basket of currencies to drop to its lowest level in seven weeks, with the Dollar Index (DXY) down 0.25% at 102.09. This resulted in an increase in the GBP/USD pair.
All Eyes on Bank of England (BoE) as UK Inflation Surges and Interest Rate Decision Looms
Regarding the UK, the GBP/USD is expected to remain strong as the Bank of England (BoE) prepares to increase rates for the eleventh consecutive time. Despite recent economic estimates suggesting a less hawkish stance, the BoE may be swayed towards more hawkish rate increases following the unexpected increase in UK inflation reported on Wednesday through the UK CPI Report.
In February, the country's annual inflation rate rose unexpectedly from 10.1% to 10.4%, with analysts predicting it to be 9.9%. This has created policy uncertainty, with market analysts expecting BoE Governor Andrew Bailey to raise interest rates by 25 basis points due to rising food and non-alcoholic beverage prices, and increasing energy expenses.
GBP/USD Intraday Technical Levels
Support Resistance
1.2202 1.2331
1.2140 1.2398
1.2073 1.2459
Pivot Point: 1.2269
GBP/USD – Technical Outlook
Yesterday, the GBPUSD pair showed positive trades and attempted to surpass the 1.2300 resistance level. However, it faced solid resistance there, and traders are anticipating further gains in upcoming sessions. The price is currently moving within a bullish channel on the chart, and the next target is expected to be around 1.2440.
To reach the mentioned target, the price needs to gain positive momentum. The EMA50 indicates that the bullish trend may continue within the channel. The expected range for today's trading is between 1.2210 support and 1.2390 resistance.
Related:
* BTC/USD Price Analysis – March 23, 2023
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