GBP/USD Forecast: Eying 1.3200 Breakout After Fed, Awaits BoE
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- The GBP/USD nears 1.3200 after the Fed announcement weakens DXY.
- The Bank of England will raise interest rates for the third consecutive month.
- These dynamics have fueled demand for risk assets.
The GBP/USD forecast is positive as the post-Fed reaction of the market weakened the USD. The market is now eyeing at BoE rate decision today.
After establishing a base in a narrow range of 1.3000-1.3080, the GBP/USD pair shows a sharp upward movement. The cable has been vulnerable in the past few sessions but has rallied sharply since the Fed’s rate announcement.
The pound was supported by a weak dollar following the Fed’s rate hike. The Fed raised lending rates by 25 basis points (bps) to curb runaway inflation. In addition to the seven interest rate hikes announced by the Fed for 2022, the Fed plans to bring order to the inflationary turmoil.
BoE to guide the market
The Fed’s monetary hangover is fading, and investors’ attention is turning to the Bank of England’s rate decision announcement. The Bank of England consistently raised rates by 50 basis points in its most recent two announcements. After the Covid-19 pandemic, the Bank of England became the first central bank to raise interest rates. A further 25 basis points will be raised by the Bank of England to curb inflation. The UK inflation rate hit a near 30-year high of 5.5% in January and is expected to rise further due to the Russia/Ukraine war.
As the US Dollar Index (DXY) teeters around Wednesday’s low of 98.30, the index waits for more declines as safe-haven appeal fades.
GBP/USD price technical forecast: Bulls eying double top
The GBP/USD price found support at 20-period SMA (4-hour chart) and sharply bounced back above 1.3100 area. The pair is now eying the double top at 1.3195. If the double top breaks, the pair will aim at 100-period SMA around 1.3250.
On the flip side, any bearish move will find support at 1.3150 ahead of 1.3100. The volume data is also showing clues for further bullishness.
GBP/USD forecast via daily open interest
The GBP/USD price gained while the open interest dropped significantly. It indicates that the upside bias was due to profit-taking by the sellers. Therefore, the bearish probability still remains in action.
