Markets await the US dollar interest rate decision today

The British pound rebounds from support levels at 1.2800

By Raed Alkhedr | @raedalkhedr | 26 July 2023

  • The British pound has experienced a series of sharp declines during the past week

  • UK inflation data has had a negative impact on the pound

  • Market expectations indicate a 25 basis point increase in interest rates for the US dollar

Economic events affecting movements in the British pound

Yesterday, the British pound experienced a notable rise against a basket of major currencies, marking its first increase in eight sessions against the US dollar. This surge follows a series of sharp losses for the British currency, which were triggered by the latest inflation data in the United Kingdom and the negative performance of key sectors, particularly the manufacturing sector experiencing a deepening recession in July. Additionally, the services sector recorded its slowest growth rate in the last six months, raising concerns about the overall health of the UK economy.

Meanwhile, the markets are eagerly awaiting the interest rate decision from the US Federal Reserve, scheduled to be released today. Market expectations point towards a 25 basis points increase in interest rates by the Federal Reserve. Investors will be closely monitoring any signals from monetary policymakers regarding potential further rate hikes or plans to halt rate increases for an extended period.

In today's trading, the British pound has started with a slight increase against the US dollar, with the currency pair hovering around the 1.2905-dollar level.

Pivotal and technical levels affecting GBPUSD movements

The GBPUSD pair recently experienced a rise, reaching the level of 1.3140. However, it failed to surpass this level and subsequently faced a decline, testing the support level at 1.2800. Surprisingly, the pair managed to hold 1.2800 as a robust support level and has since rebounded, currently trading near 1.2900.

Should the pair maintain its support at 1.2800 and successfully surpass the resistance level at 1.2950, there is a possibility of further upward movement to test the previous peak around 1.3140. If this level is surpassed, the rise may extend towards 1.3300.

On the other hand, a decline below the support level of 1.2800 could lead to additional pressure and a potential further drop, with the next support level to watch being 1.2640. This level represents a strong sideways support area for the GBPUSD pair.

GBP 7-26-2023