British Pound gains momentum before Fed meeting
Markets expect a 25 basis point hike
Forecasts suggest that the Federal Reserve will temporarily halt interest rate hikes during upcoming meetings
There are expectations for strong price movements of the British Pound against the US dollar following the release of the Federal Reserve meeting outcome
The GBP/USD pair continues to trend upwards in the short and medium term
Markets are awaiting the outcome of the US Federal Reserve meeting today
Despite a decline in the US dollar index, the British Pound has been showing a noticeable decline since the beginning of this week's trading. The GBP/USD pair started the day with a slight increase against the US dollar, trading near the level of $1.2488.
Today, markets are also anticipating several important economic data releases from within the United States, including the Federal Reserve meeting, with expectations of a quarter-point hike to keep up with rising inflationary pressures. Additionally, forecasts suggest that following today's meeting, the Federal Reserve will temporarily halt interest rate hikes starting from the June meeting to evaluate its tightening monetary policy on the state of the economy.
On the other hand, earlier, Ben Broadbent, Deputy Governor of the Bank of England, stated that if the bank had raised interest rates six months ago, it could have lowered inflation's peak by up to half a percentage point. He emphasized that any increase in inflation rates during the coming period would lead to the Bank tightening monetary policy more quickly.
The key levels that may affect the movements of the British Pound against the US dollar are as follows
After the GBP/USD pair declined to test the lower limit of the upward channel at the level of 1.2440, and it quickly rebounded to trade around the level of 1.2520. It is likely that if the pair stays above the level of 1.2440, the current upward movement may extend to test the resistance levels at 1.2580. If the pair breaks above this level, the upward movement may continue to test the upper limit of the upward channel at the level of 1.2630.
If the pair declines from current levels, it may find support at the level of 1.2440. However, if it breaks below this level and prices remain below it, this may contribute to further downside for the pair to test the next support level at 1.2350. If this level is also broken, the pair's direction may reverse to the downside on average, and the decline may extend to test the support level at 1.2280.
Technical indicators suggest that the pair may continue to rise and extend its upward movement to test the upper limit of the upward channel at the level of 1.2630. However, all of this is conditional on the price of the pair staying above the level of 1.2440.