GBP/USD

GBP/USD Pulls Back Ahead Of BoE Interest Rate Decision

Key Insights

  • GBP/USD is moving lower after yesterday’s rally. 
  • Today, foreign exchange market traders will focus on the BoE Interest Rate Decision. 
  • A move below the support at 1.2530 will push GBP/USD towards the next support level at 1.2510.

British Pound Is Losing Ground Against U.S. Dollar

GBP/USD is currently trying to settle back below the support at 1.2530, while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index rebounds after yesterday’s sell-off. Currently, it is trying to settle back above the resistance at 102.75. In case this attempt is successful, the U.S. Dollar Index will move towards the next resistance level at 103, which will be bearish for GBP/USD.

Yesterday, the Fed raised the interest rate from 0.5% to 1.0% and said that it will begin to reduce the size of its balance sheet in June. The comments of the Fed Chair Jerome Powell were more dovish than expected, and the U.S. dollar found itself under material pressure.

Today, traders will focus on the BoE Interest Rate Decision. Analysts expect that BoE will increase the interest rate from 0.75% to 1.0%.

In addition, traders will have a chance to take a look at the final reading of the UK Services PMI report for April. The report is expected to show that UK Services PMI declined from 62.6 in March to 58.3 in April.

Technical Analysis

gbp usd may 5 2022

GBP/USD has pulled back towards the support level at 1.2530. In case GBP/USD manages to settle back below this level, it will head towards the next support, which is located at 1.2510.

A move below the support at 1.2510 will open the way to the test of the support at 1.2475. If GBP/USD declines below this level, it will head towards the next support level at 1.2450.

On the upside, the nearest resistance level for GBP/USD is located at 1.2565. If GBP/USD manages to settle back above this level, it will head towards the resistance level at 1.2600. A successful test of the resistance at 1.2600 will push GBP/USD towards the resistance at 1.2630.

For a look at all of today’s economic events, check out our economic calendar.