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20/09/24
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GBP/USD Gains Continue as BoE’s Rate Hold Strengthens Pound
The GBP/USD currency pair is experiencing its third consecutive day of gains, buoyed by several supportive factors. Following the Bank of England’s recent decision to maintain interest rates, the British pound has found renewed strength. This decision coincides with a decline in the US dollar, as expectations of additional interest rate cuts from the Federal Reserve create a favorable environment for the pound.
During the Asian trading session, the GBP/USD hovered around the 1.3300 level, maintaining momentum just below its peak since March 2022, reached the previous day. The Bank of England’s announcement, which included a plan to reduce its government bond holdings by £100 billion over the next year, has positively influenced the pound. In contrast, the US dollar remains under pressure, weighed down by the prospect of easier monetary policy from the Fed.
From a technical standpoint, the recent breakout above a descending trendline that had persisted since late August serves as a bullish indicator for traders. Various oscillators in the daily charts are positioned in a way that signals potential upward movement for GBP/USD, although some indicators such as the Relative Strength Index indicate that the pair may be slightly overextended.
Traders may benefit from observing some intraday consolidation or a minor pullback before committing to further positions. The GBP/USD is on track to test the next significant resistance level around 1.3365, with ambitions to target the notable 1.3400 psychological barrier, along with the swing high from March 2022, situated between 1.3435 and 1.3440.
On the downside, the 1.3265 to 1.3260 range appears to act as a protective barrier against immediate losses. Should the pair experience a decline, it is likely to attract new buyers, particularly near the 1.3200 level, which now serves as critical support after previously acting as resistance. A decisive break below this point could trigger further corrections toward the horizontal support level around 1.3150.
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