is trying to stabilize near 1.3317 on Thursday morning.
The pound barely reacted to weaker-than-expected UK inflation data on Wednesday. Investors preferred to take a wait-and-see attitude ahead of today's labor market statistics and the Bank of England meeting. However, the pound still had to respond to the US dollar's movements following the Federal Reserve meeting.
Inflation in May remained at 2.8% year-on-year, while the market expected it to accelerate to 3.0%. The weaker-than-expected data revived debate over whether the Bank of England will need to raise interest rates this year.
Market participants are still pricing in a rate hike before the end of the year. However, if the regulator indicates that it is willing to maintain the current policy stance without taking additional measures, this could increase pressure on the British currency.
The Bank of England meeting is expected to end with no interest rate changes. However, some members of the Monetary Policy Committee, including chief economist Huw Pill, could vote again in favor of tighter policy. The market will closely monitor this.
Investors will also pay close attention to the employment data, which will serve as an important reference point for the Bank of England's future decisions. At the same time, the market is following political developments in the UK, as possible changes within the ruling Labor Party could add a political risk premium to the pound.
For now, the British pound remains relatively stable. However, the next 24 hours may prove decisive for expectations regarding the path of the Bank of England's interest rates and the future dynamics of the British currency.
GBP/USD Technical Analysis
On the GBP/USD H4 chart, the market has completed a downward wave to 1.3262. A growth link towards 1.3340 is expected. In practice, a wide consolidation range is forming below this level. If the price breaks out of the range to the upside, it will open the potential for the wave to continue towards 1.3500. If the price breaks lower, it will open the possibility of a new drop towards 1.3194. Technically, this scenario is confirmed by the MACD indicator: its signal line is below zero and points firmly downwards.
On the GBPUSD H1 chart, the market has formed a compact consolidation range around 1.3300. At the moment, the range has widened down to 1.3297. Further growth is expected towards 1.3340. Technically, this scenario is also confirmed by the stochastic oscillator: its signal line is above 50 and pointing firmly towards 80.
By RoboForex Analysis Department
Disclaimer: Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
