GBP/USD pares intraday recovery gains after BoE’s expected 50 bps rate hike
- GBP/USD trims a part of its intraday gains after the BoE delivers a 50 bps rate hike on Thursday.
- The USD remains depressed below a two-decade higher and continues to extend some support.
- Aggressive Fed rate hike bets act as a tailwind for the USD and should cap the upside for the pair.
The GBP/USD pair meets with some supply and trims a part of its strong intraday gains after the Bank of England announced its policy decision. Spot prices retreat back below the 1.1300 mark, though remains comfortably above the lowest level since 1985 touched earlier this Thursday.
As was widely expected, the UK central bank raises interest rates by 50 bps - the seventh hike since December - at the end of the September policy meeting. This, however, might have disappointed some investors anticipating a more aggressive rate increase and turned out to be a key factor acting as a headwind for the British pound.
The US dollar, on the other hand, is seen consolidating its sharp intraday retracement slide from a new two-decade high and continues to lend some support to the GBP/USD pair. The sharp USD downfall on Thursday follows the news that the Japanese government has intervened in the forex market, which triggers a massive rally in the Japanese yen.
That said, a more hawkish stance adopted by the Federal Reserve should continue to lend some support to the greenback. Apart from this, a bleak outlook for the UK economy might further contribute to keeping a lid on any meaningful upside for the GBP/USD pair, warranting some caution before positioning for any meaningful recovery move in the near term.
Technical levels to watch