• Fed Chair Powell adhered to his customary messaging during his testimony.

• The BoE will likely raise interest rates for the 13th consecutive time on Thursday.

• British inflation persisted in May, holding steady at 8.7%.

Today’s GBP/USD forecast is bullish. On Thursday, the dollar remained close to a one-month low against various currencies. Fed Chair Jerome Powell adhered to his customary messaging during his semi-annual testimony, leaving little room for surprises.

Notably, Powell stated that if the economy continues on its current trajectory, it is “a pretty good guess” that the Fed will pursue further rate hikes. These remarks align with the central bank’s statements from its recent policy meeting.

On the other hand, the pound hovered near a one-year high, ahead of the Bank of England’s interest rate decision later in the day. The recent inflation report showed higher-than-expected figures and will likely keep policymakers alert.

Consequently, the BoE will likely raise interest rates for the 13th consecutive time on Thursday. However, traders hold differing views regarding the magnitude of the hike. While some lean towards a 25-basis-point increase, others consider a 50-basis-point hike.

Notably, British inflation persisted in May and did not ease, holding steady at 8.7%. It defied market expectations and surpassed the inflation rates of other major economies.

Economists at ANZ stated that the robust UK inflation figure had heightened the likelihood of a rate hike larger than 25 basis points. Furthermore, it raised the potential for a higher terminal rate and a prolonged period of elevated rates.

GBP/USD Key Events Today

Investors have a big day ahead as they await the Bank of England monetary policy meeting. A hawkish tone could see GBP/USD rise. Additionally, they will continue listening to Fed Chair Jerome Powell’s testimony to Congress.

GBP/USD Technical Forecast: Capped By The 30-SMA As Resistance

GBP/USD 4-hour chart

After breaking below the 30-SMA on the 4-hour chart, GBP/USD has risen to retest the SMA. It is now looking to resume the bearish move and retest the 1.2700 support level. With the price below the 30-SMA and the RSI slightly under 50, the bias for GBP/USD is slightly bearish. 

Bears must break below 1.2700 and start making lower lows and highs to strengthen the bias. However, if they fail to do this, the price will likely resume the uptrend by breaking above the 30-SMA and the 1.2800 resistance.

https://www.forexcrunch.com/gbp-usd-forecast-gaining-back-to-1-28-ahead-of-boe-meeting/