Bank of England Pauses Rate Hikes with Lower-Than-Expected Inflation

The Bank of England has stopped its 14 consecutive interest rate hikes as new data reveals inflation is lower than anticipated. After raising rates since December 2021, bringing the primary policy rate to 5.25% in August from 0.1%, the bank voted 5-4 to maintain this rate at its September meeting. They noted signs of the monetary policy's impact on the labor market and the real economy. The bank also unanimously voted to reduce its government bond purchases by £100 billion over the next year to a total of £658 billion. The decision followed lower-than-expected UK inflation figures for August. Despite pausing, Bank of England Governor Andrew Bailey emphasized the need for vigilance. The move signals the bank's cautious approach to balancing inflation control with economic stability. UK GDP contracted by 0.5% in July, and some companies issued profit warnings. The US Federal Reserve also maintained interest rates but hinted at one more hike by year-end. Analysts are speculating whether this pause represents the peak of the interest rate cycle, with concerns about cooling wage growth and a possible recession in developed markets in 2024.

GBP/USD is under significant selloff pressures after yesterday's BoE meeting and breaking a significant level toward the next target of 1.2200, followed by the 1.2100 level.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.2580	1.2450	1.2400	1.2200	1.2100