The GBP/USD pair demonstrated volatility in the wake of the Federal Reserve’s interest rate announcement, alongside a rise in geopolitical tensions. It was trading at 1.3480, just below this month’s high of 1.3595, as focus shifted to the upcoming Bank of England interest rate decision. The GBP/USD pair saw a pullback, driven by multiple factors, particularly the recent interest rate decision from the Federal Reserve. In the most recent meeting led by Jerome Powell as Fed Chair, it was determined to keep interest rates steady within the range of 3.50% to 3.75%.
Officials stated that they will continue to monitor the economy to evaluate the possibility of adjusting interest rates this year. The bank indicates apprehension regarding the likelihood of sustained inflation in the nation, particularly as energy and food prices continue to rise. Recent data indicates that crude oil prices have continued their upward trajectory, with AAA reporting that the average gasoline price has increased to $4.15. Expectations suggest that food prices are likely to rise further as a result of the growing costs associated with fertilizers. Oil prices experienced a significant increase as market participants reacted to the ongoing blockade of the Strait of Hormuz. In a statement, Trump conveyed that the US will maintain its blockade and may contemplate a restricted military action against Iran.
The GBP/USD pair is positioned to react to the upcoming interest rate decision from the Bank of England, which is scheduled for announcement later today. Experts predict that the bank will keep interest rates steady at 3.75%. A notable challenge for the BoE and the Federal Reserve is that their economies are presently facing stagflation, characterized by high interest rates and slow economic growth. In conjunction with the upcoming decision from the Bank of England, the United States is poised to unveil the latest GDP and personal consumption expenditure report. Experts predict that the upcoming data will reveal an economic growth of 2.3% in Q1, building on a growth of 0.5% in Q4.
The daily chart reveals that the GBP/USD pair has been fluctuating within a narrow range in recent days. The asset has consistently operated within the defined boundaries set by the support and resistance levels at 1.3475 and 1.3595. The pair has formed a bullish flag pattern, defined by a vertical line alongside a horizontal channel. The asset has exceeded the 50-day Exponential Moving Average. At the same time, the pair has formed an inverted head-and-shoulders pattern, which generally suggests a strong bullish breakout, potentially targeting 1.3600.