**GBP/USD Price Forecast: Pound Soars to 1.3160 as Bank of England Surprises Markets**
*By TradingNews.com*
The British pound posted a significant rally, surging to the 1.3160 level against the US dollar following an unexpected move from the Bank of England (BoE). The dovish surprise at the latest policy meeting propelled sterling higher, painting a new technical and fundamental landscape for the GBP/USD pair. This article delves into the factors behind the pound’s rise, the central bank’s pivotal decision, the broader macroeconomic context, and where GBP/USD heads next.
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## Bank of England: Dovish Surprise Stimulates Sterling Bulls
The catalyst for the pound’s recent climb was the Bank of England’s monetary policy update. While markets were anticipating a relatively hawkish hold, the central bank took a more accommodating stance. Key points from the BoE decision include:
– The Monetary Policy Committee (MPC) held the base rate steady at 5.00 percent.
– Two committee members voted for a rate hike, but the majority preferred a more cautious approach.
– Forward guidance shifted, suggesting that rate cuts may be considered sooner than previously expected, provided inflation continues to moderate.
The dovish tilt caught many investors off-guard. Traders who had previously anticipated the Bank would hold rates higher for longer, amid persistent inflation data, recalibrated their positions. As a result, demand for sterling intensified as expectations mounted that the UK economy could avoid recessionary risks while still paving the way for easing later this year.
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## UK Economic Fundamentals: On a Better Footing
Several improving economic indicators added fuel to the pound’s momentum:
– The latest inflation figures showed a continued decline, with headline CPI falling to 2.1 percent year-on-year—just above the BoE’s 2 percent target.
– Core inflation, a key measure for policymaking, also dropped, offering reassurance to policymakers that cost pressures are moderating.
– Recent GDP data revealed modest growth of 0.3 percent quarter-on-quarter, helping to dispel immediate fears of contraction.
– Labor market reports indicated wage growth is slowing, which aligns with a cooling inflation outlook and may permit the BoE to ease monetary policy without jeopardizing price stability.
– UK consumer confidence ticked higher in June, according to the GfK survey, as households started to feel the effects of falling prices and an improving jobs outlook.
These signals together sketch a more optimistic picture for the UK. Compared to the US, where disinflation progress has been uneven and the Federal Reserve remains cautious, the pound was able to capitalize on a relatively brighter domestic backdrop.
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## Technical Analysis: GBP/USD Breaks Higher
The technical structure for GBP/USD has shifted decisively in favor of the bulls following the latest move. Key technical observations include:
– The pair broke above the 1.3100 psychological barrier, a level that had previously acted as strong resistance.
– Immediate resistance was encountered near 1.3160, now serving as a pivotal battleground for further upside.
– The 200-day moving average, located around 1.3030, has provided underlying support, with multiple daily closes above this level confirming the bullish trend.
– Relative Strength Index (RSI) readings have entered overbought territory, indicating rapid momentum, but not yet to levels that traditionally signal reversal.
– Fibonacci retracement drawn from the April swing high to the May low suggests 1.3180 as a potential upside target, while support is firm at 1.3000.
Traders will be closely monitoring how the pair reacts to further tests of the 1.3160-1.3180 resistance zone. Sustained closes above these levels would open the door to a push toward 1.3250 and beyond, with the next key resistance at 1.3320.
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## Pound’s Performance: How GBP/USD Compares Globally
The surge in GBP
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