Pound Plunges Ahead of BOE Meeting
BOE In Focus
GBPUSD is coming under heavy selling pressure today ahead of the June BOE meeting. The BOE is widely expected to keep rates on hold and on the back of recent data weakness, risks of a less-hawkish message from the bank are growing. Earlier in the week, UK CPI was seen holding steady at 2.8%, below the 3% the market was looking for. Today, private sector wage growth was also seen weaker-than-forecast at 2.9%, marking the first sub 3% reading since 2020. When taken in the context of recent softer labour market data, there is ample evidence to suggest that the BOE can look beyond the recent inflationary spike, expecting second-round inflation effects to be muted. The sharp drop in oil prices this week amidst news of a US/Iran peace deal is also an important development, helping cool the medium-term inflation outlook.
Strong USD/ Hawkish Fed Shift
The pair is also suffering under the weight of a strong US Dollar on the back of yesterday’s hawkish FOMC meeting. The first meeting under new president Kevin Warsh saw a clear hawkish shift in the updated dot plot forecasts with nine members now expecting at least one hike this year, up from zero in March. 2026 rate hike pricing has now jumped higher to above 80% from below 605 ahead of the meeting. Against this backdrop, GBPUSD is vulnerable to a deeper move lower into next week if the BOE does look to downplay inflation risks and dilute any hawkish signalling.
Technical Views
GBPUSD
The failure at 1.3446 has seen the market turning lower again, now breaking below the triangle lows and testing support at the 1.3238 level. With momentum studies bearish, focus is on a continuation lower with 1.3046 the next target for bears. Outlook remains bearish here while price stays below q.3446 near-term.
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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.