Will BOE Drive GBPUSD Higher Next Week?
UK Retail Sales Jump
GBPUSD remains lower as we head into the weekend despite seeing some better data through the week. Labour market data earlier in the week was a mixed bag with the unemployment rate seen falling 0.3% but payrolls seen dropping to their lowest level since 2022. However, PMIs midweek were seen surging higher with both services and manufacturing topping expectations, pushing further into expansionary territory. Finally, this morning we saw retail sales firmly beating expectations at 0.7% up from -0.6%, above the 0% the market was looking for.
BOE Expectations
Looking ahead to next week’s Bank of England meeting, expectations are split over whether the bank will hike rates. Inflation has continued to push higher recently with lates week’s March CPI print seen topping forecasts. Additionally, with oil prices still above $100 p/b, inflation risks remain well entrenched here and should put greater pressure on the BOE. However, for now it seems that sentiment is skewed towards the BOE holding rates steady this month in line with recent signalling from BOE governor Bailey who said that the bank was in no rush to tighten monetary policy given stagflation risks.
Iran War Focus
As such, its likely we see the BOE hold rates next week though hawkish warning should keep GBP underpinned. The main driver near-term will remain the Iran war. If we see any breakthrough in peace talks, this should see USD heavily lower allowing GBP room to push higher. However, should talks break down again or the ceasefire collapse, USD will be sharply higher, sending GBP south for now.
Technical Views
GBPUSD
For now, the pair holds above the 1.3446 level. While this area holds, focus is on a fresh push higher and a return to the 1.3774 level highs. However, if we break below current support, focus turns to the 1.3238 next and the bull trend line as the next support zone to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.