Daily Analysis GBPUSD - 22 June 2023

The expectation is widespread that the Bank of England (BoE) will raise its policy rate by 25 basis points (bps) to reach 4.75%. Given the absence of a post-meeting press conference, market participants will carefully scrutinize the policy statement for any new insights into the future direction of the policy.

Although unlikely, a 50 bps rate hike would represent a significant and unexpected shift towards a more hawkish stance, potentially favoring the GBP/USD exchange rate. In May, two policymakers voted in favor of maintaining the policy rate. If these policymakers adopt a more hawkish stance and the BoE raises the rate with a unanimous vote, the Pound Sterling could display resilience against other currencies. In such a scenario, remarks on inflation developments could influence the currency's valuation.

Since the last policy meeting, both inflation and wage inflation in the UK have remained uncomfortably high, contradicting the BoE's earlier forecasts of a sharp decline in inflation starting from April. Recognizing the persistence of elevated inflation and acknowledging the need for further tightening could stimulate demand for the Pound Sterling.

The GBP/USD pair remains in a downtrend, with market participants eagerly awaiting the upcoming Bank of England (BoE) meeting. The level of 1.2700 is currently acting as a support level, while 1.2750 is serving as resistance. Moving forward, the next anticipated resistance level for GBP/USD is around 1.3000. However, there are additional factors to consider.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.3200	1.3000	1.2800	1.2650	1.2540	1.2460