GBPUSD:
The GBP/USD pair is showing signs of recovery, trading close to 1.2580 during Monday’s Asian session. This comes as the Bank of England (BoE) saw a divided vote among its policymakers on the necessity of interest rate cuts to address the slowing economy. The Bank of England’s Monetary Policy Committee (MPC) voted 6-3 in favour of maintaining current interest rates, a decision that was stronger than anticipated.Trading volume is reported to be lower than usual in anticipation of the upcoming New Year holidays.
Rising US Treasury yields are a potential positive for the US Dollar (USD), with 10-year bonds reaching a seven-month high last Friday and currently at around 4.620%. Additionally, expectations that President-elect Donald Trump’s policies of deregulation, tax cuts, higher tariffs and tougher immigration could spur inflation and slow the pace of US Federal Reserve (Fed) rate cuts are contributing to USD gains.
At its December meeting, the Bank of England decided to maintain the current interest rate of 4.75 per cent and to continue with its forecast of a ‘gradual’ reduction in interest rates next year.Bank of England Governor Andrew Bailey said, ‘We believe that a gradual approach to future interest rate cuts remains the right approach, but with heightened uncertainty in the economy, we cannot say exactly when and by how much we will cut rates next year.’ A dovish outlook from the Bank of England next year could potentially have a negative impact on the value of the pound sterling (GBP) against the US dollar in the near term.
Trading recommendation: We follow the level of 1.2600, when fixing above it we consider Buy positions, when rebounding we consider Sell positions.
Origin: FreshForex
