Daily Analysis GBPUSD - 4 Aug 2023

The Bank of England has increased its key interest rate by 25 points to 5.25%, as widely anticipated. The hike was supported by eight out of nine members, with two members advocating for a 50-basis point increase.

According to the Bank's updated forecasts, the rate is expected to reach over 6%, a significant increase from the "just over 4%" projected in the May Inflation Report. This response comes as both the market and the central bank address persistent inflation.

Despite the rate hike, the labor market remains tight, and wage growth has stayed at 7.7% from three months to May. However, wage increases have not been sufficient to counter the acceleration in price growth over the past two years, failing to bring inflation back to the target level. Consequently, the Bank of England must continue its tight monetary policy stance, as it had warned in its statement.

The GBP/USD found support at the 1.2650 level waiting for today's data to find direction. A breakout of the actual support level may take the price toward 1.2600 followed by 1,2300.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.3220	1.3150	1.3000	1.2650	1.2600	1.2400