*Original article by InvestingLive News Desk. This is a detailed expansion of the source content for educational and informational purposes.*
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# GBP/USD Technical Analysis: The Pound Gains Momentum from Hawkish Bank of England Policy Cut
The GBP/USD currency pair, widely known as “Cable,” has experienced renewed bullish momentum following the latest policy moves from the Bank of England (BoE). Despite cutting its interest rate, the BoE’s distinctly hawkish tone has lent support to the British Pound, giving traders and investors a nuanced but potentially powerful signal regarding the future trajectory of UK monetary policy and its effect on the GBP/USD pair.
In this comprehensive analysis, we delve into the key catalysts behind the recent pound strength, dissect price action from both technical and fundamental vantage points, and provide insight into future scenarios. Drawing upon the original analysis from InvestingLive, we expand on the nuances influencing the current and future direction of GBP/USD.
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## Fundamental Overview: Why the Pound is Rising
On its latest policy announcement, the Bank of England cut its benchmark rate as widely expected, reducing the Official Bank Rate by 25 basis points to 5 percent. However, markets quickly pivoted from the rate decision to the tone and substance of the MPC’s forward guidance.
### The Key Points from the BoE Meeting:
– **25bp Rate Cut, Policy Rate Now at 5 Percent**
– **Split Vote:** Several MPC members favored holding rates steady, while the majority voted for a cut—highlighting a degree of division and caution inside the Bank.
– **Hawkish Forward Guidance:** Despite the cut, Governor Andrew Bailey and multiple MPC comments stressed that further reductions would be gradual and tightly data dependent.
– **Inflation Concerns Remain:** The BoE reaffirmed that inflation pressures, especially in services and wage growth, remain robust.
– **No Pre-Commitment to Further Easing:** The bank offered no timeline nor expectation of larger or swifter cuts, signaling that monetary conditions could remain tighter for longer compared to other major central banks.
### BoE Versus Fed and ECB
– **Contrast to Federal Reserve and ECB:** The signaling from the BoE stands in contrast to the more dovish Federal Reserve outlook and more cautious European Central Bank stances, boosting relative yield support for the Pound.
– **UK Growth Outlook:** While UK economic data is showing some recovery, growth remains subdued but better than feared. The currency market interprets the BoE’s cautious approach as a reassurance that inflation is being taken seriously.
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## GBP/USD Reaction: A Cable Surge
The market’s immediate reaction to the BoE’s blend of action (rate cut) and words (hawkish caution) was telling. After an initial dip on the announced cut, GBP/USD rapidly reversed course, surging higher as traders digested the underlying message: rate cuts may be fewer, smaller, and slower than the market had previously priced.
– **GBP/USD Rallied from 1.2700 to 1.2850** in the hours following the BoE’s update
– The move marked a break above recent range highs and offered confirmation of strength
### Contributing Factors to Recent GBP/USD Rally
– **Interest Rate Differential:** The BoE’s hawkish tone contrasted with expectations for more aggressive rate-cutting cycles from the Fed and the ECB, narrowing the differential to the pound’s benefit.
– **Position Unwinding:** Many traders were positioned for a dovish BoE surprise; their unwind supported the pound via covering shorts.
– **Better UK Economic Data:** Surprising upside in UK wages and services inflation in the weeks before the BoE helped the pound’s resilience.
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## Technical Analysis: GBP/USD Chart Developments
Examining GBP/USD through a technical lens, recent developments provide further validation for Pound bulls and signal potentially continued upside if key resistance levels are breached.
### Daily Chart Patterns
1. **Strong Support at 1.2675:** The pair found repeated buying interest near
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