**GBP/USD Price Forecast: Pound Soars to 1.3160 as Bank of England Surprises Markets**
*Original reporting by Chris Johnson, TradingNews.com*
The British pound (GBP) has staged a dramatic rally against the US dollar (USD), with the GBP/USD currency pair surging to nearly 1.3160 in recent trading. This marks the highest level for the pound in months, fueled by a combination of strong economic data out of the UK and a sharp shift in tone from the Bank of England (BoE). As traders reassess the interest rate outlook on both sides of the Atlantic, the pound’s momentum has become one of the most notable stories in the currency market this quarter.
#### Overview
– GBP/USD soared past key resistance, testing the 1.3160 mark
– BoE signals a more hawkish stance amid sticky inflation
– Robust UK wage and employment data support sterling’s rally
– US dollar weakened by softer CPI data and dovish Fed commentary
– Market eyes next BoE meeting and global macro trends for direction
This article examines the underlying drivers of the pound’s latest surge, key technical levels to watch, and what traders can expect going forward, drawing on original reporting by Chris Johnson at TradingNews.com.
## Bank of England’s Hawkish Pivot Surprises Markets
The most significant catalyst for the GBP/USD rally came from the Bank of England’s latest monetary policy statement and post-meeting press conference. While the BoE kept its benchmark rate unchanged at 5.25 percent as widely expected, Governor Andrew Bailey delivered a far more hawkish message than anticipated.
### Key Takeaways from the BoE Meeting
– The BoE acknowledged that UK inflation remains elevated well above its 2 percent target, especially in the services sector.
– Governor Bailey emphasized that policy will remain “sufficiently restrictive for sufficiently long” to bring inflation back to target.
– Forward guidance dropped hints of potential further tightening if inflation proves more persistent.
– The MPC vote showed a surprising split, with 2 out of 9 members pushing for an immediate rate hike.
– The BoE upgraded its economic forecasts, noting improved resilience in the jobs market and higher-than-expected wage growth.
The message to markets was clear: the Bank of England is not yet finished in its battle gegen inflation and might resume tightening, even as its global peers, especially the US Federal Reserve, appear more inclined to pause or even cut rates later this year.
## Robust UK Economic Data Underpins Pound
Beyond central bank rhetoric, recent fundamental data out of the UK has painted a more optimistic picture for the British economy, providing more fuel for sterling’s rally.
### UK Wage Growth and Employment Surprise on the Upside
– UK average weekly earnings jumped 5.9 percent year-on-year, well above the BoE’s comfort zone.
– Private sector wages, considered a key inflation gauge by the MPC, surged 6.5 percent on an annualized basis.
– The unemployed rate remained steady at 4.2 percent, signaling a resilient labor market despite rate hikes.
– Job vacancies, a leading indicator, showed only a modest decline, indicating sustained demand for workers.
Strong wage gains add to the risk of entrenched inflation and justify the BoE’s hawkishness, boosting the appeal of the pound relative to currencies backed by more dovish central banks.
### UK CPI Inflation Still Running Hot
– June Consumer Price Index (CPI) came in at 6.4 percent year-on-year, among the highest in G7 economies.
– Core inflation (excluding volatile energy and food) was especially sticky, at 5.8 percent.
– Services inflation, an area the BoE closely monitors, hit 7.2 percent, showing price pressures are not abating quickly.
Such data keeps expectations high for “higher for longer” UK rates, providing underlying support for the pound.
## Dollar Weakness Amplifies GBP/USD Gains
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