Technical Bias: Bullish
- GBPUSD soars nearly 1 percent to 1.5063, its highest level since March 6.
- Bank of England Monetary Policy Committee votes unanimously to keep interest rates at record lows, according to the minutes of the April policy meetings.
- BOE more confident about Eurozone growth and inflation.
The GBPUSD climbed to its highest level in more than six weeks on Wednesday, as the Bank of England voted unanimously to hold interest rates, but struck a more bullish tone regarding inflation and the Eurozone recovery.
The GBPUSD climbed around 150 pips to 1.5076, its highest level since March 6. It would subsequently consolidate at 1.0563, up 0.95 percent. The 1-hour chart is showing a bullish trend, as the pair looks to the 1.5102 resistance line. Price above that level would confirm a bullish breakout. On the downside, the GBPUSD is supported at 1.4864. The bias is favourable on the moving averages, as the GBPUSD has established highs well above the SMA100 and SMA200.
However, a closer examination at the RSI suggests the pair has moved into overbought territory, which means a reversal play may be in order. Key US data releases on Wednesday include existing home sales and the Energy Information Administration’s inventory report.
The Bank of England’s Monetary Policy Committee voted unanimously to hold interest rates at 0.5 percent at the April 8-9 policy meetings, the official transcripts revealed on Wednesday. That was the fourth successive meeting officials were unanimous in their decision.
While policymakers acknowledged the risks of low inflation, they were confident that economic growth would continue and that the European Central Bank’s stimulus program was lifting prospects in the neighbouring Eurozone, Britain’s largest trade partner.
“Although it was too early to be confident, a succession of firmer data suggested that growth in the euro area economy was picking up,” the minutes of the April meetings showed.
Policymakers still expect interest rates to dip below zero in the near-term, but that stronger economic growth would inevitably push up prices and wages. The exact timing of a first rate increase could not be gleaned from the official transcript, but economists suggest the BOE could wait even longer before it begins normalizing monetary policy.