GBP/USD Signal: Extremely Bullish Ahead of BOE Decision – 17 March 2022
The pair will likely keep rising as bulls target the 50% Fibonacci retracement level at 1.3325.
Buy the GBP/USD pair and set a take-profit at 1.3325.Add a stop-loss at 1.3050.Timeline: 2 days.
Set a sell-stop at 1.3110 and a take-profit at 1.3010.Add a stop-loss at 1.3250.
The GBP/USD pair held steady on Thursday morning as investors reflected on the hawkish Fed decision as they waited for the Bank of England (BOE). It rose to a high of 1.3160, which was the highest level since March 10th.
Fed and BOE Decisions
The GBP/USD pair rose in the overnight session after the Federal Reserve delivered a relatively hawkish statement.
After concluding its two-day meeting, the Open Market Committee decided to increase the Federal Funds Rate by 0.25%. This increase was in line with what most analysts were expecting. It was also in line with what Jerome Powell hinted during his congressional testimony two weeks ago.
In his statement, Powell hinted that the bank will embrace a more hawkish tone in a bid to contain the rising inflation. He estimated that the Fed will hike interest rates in all the remaining meetings of the year.
The next key catalyst for the GBP/USD price will be the upcoming interest rate decision by the Bank of England (BOE). Like the Fed, analysts expect the bank to deliver another 0.25% rate increase as it tries to battle the rising inflation.
The BOE has embraced a more hawkish tone for a while. It delivered its first interest rate hike in December and then in February. If it raises in this meeting, it will be the first time in almost 20 years that it has increased rates in three straight meetings.
Like in the United States, the UK is also battling the current wave of inflation. Recent data revealed that consumer inflation has jumped to the highest level in years while the unemployment rate has risen.
The GBP/USD pair also rose as global risks declined following reports that Ukraine and Russia were nearing an agreement to stop war.
The four-hour chart shows that the GBP/USD pair has made a strong recovery in the past few days. It has risen from this week’s low of 1.300 to the current level of 1.3160. On the 4H chart, the pair moved above the 25-day and 50-day moving averages while the MACD has moved above the neutral line.
The pair is also slightly above the 23.6% Fibonacci retracement level. Therefore, the pair will likely keep rising as bulls target the 50% Fibonacci retracement level at 1.3325.