#GBPUSD @ 1.12560 The BoE raised rates to 2.25%, though the interest rate differential with the Fed capped upward pressure on the . (Pivot Orderbook analysis)

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• The BoE raised rates to 2.25%, though the interest rate differential with the Fed capped upward pressure on the GBP/USD.
• US Initial Jobless Claims again exceeded estimations, justifying the case for yesterday’s Fed rate hike.
• On Friday, S&P Global PMIs would be featured for the UK and the US, and Fed Chair Jerome Powell will speak.

The pair currently trades last at 1.12560.

The previous day high was 1.1385 while the previous day low was 1.1237. The daily 38.2% Fib levels comes at 1.1294, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.1328, expected to provide resistance.

The British pound oscillates around its opening price, following consecutive monetary policy decisions of the Bank of England, earlier rising rates by 50 bps, while the Fed hiked 75 bps on Wednesday. Initially, the GBP/USD dropped toward new YTD lows at 1.1211 but bounced off and hit a daily high above 1.1350 before tumbling below the 1.1300 mark. At the time of writing, the GBP/USD trades around 1.1258s.

Overnight, market sentiment remains negative, as shown by global equities trading in the red. The Bank of England lifted rates to the 2.25% mark while saying it would continue to “respond forcefully, as necessary” to elevated prices. Worth noting that three members of the Monetary Policy Committee (MPC), namely Ramsden, Haskel, and Mann, voted for a 75 bps. In contrast, Swati Dhingra, its newest member in place of Michael Saunders, wanted a 25 bps.

At the same meeting, the MPC voted to reduce the BoE’s GBP 838 Billion by 80 billion pounds over the coming year. The BoE expects inflation to peak at around 11%. Now that September’s meeting is in the rearview mirror, money market futures still estimate the BoE to increase rates towards the 3.75% mark.

Aside from this, the US economic docket featured unemployment claims for the week ending on September 17, which rose by 213K less than estimates of 217K, further confirming yesterday’s Fed decision to hike rates by ¾ of a percent toward the 3.25% threshold, as data shows a solid labor market.

In the meantime, the US Dollar Index, a performance measure of the buck’s vs. six currencies, barely rises 0.05% up at 111.408, while the US 10-year T-bond yield skyrockets 17 bps, toward the 3.704% threshold, for the first time since February of 2011.

Therefore, the GBP/USD would likely remain on the defensive. After the BoE’s projected a 15-month recession, to likely begin by the year’s end, will further exert downward pressure on the pair, as the US dollar will likely continue to strengthen as the Fed prepares to end the 2022 tightening cycle at around 4.4% levels.

The UK economic calendar will feature the GfK Consumer Confidence and the S&P Global Services, Manufacturing, and Composite PMIs. On the US front, the US S&P Global PMIs would also be reported, alongside Fed Chair Jerome Powell’s speech at around 18:00 GMT.

Technical Levels: Supports and Resistances

GBPUSD currently trading at 1.1258 at the time of writing. Pair opened at 1.1267 and is trading with a change of -0.07 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1.1548, 50 SMA 1.1839, 100 SMA @ 1.2071 and 200 SMA @ 1.2676.

The previous day high was 1.1385 while the previous day low was 1.1237. The daily 38.2% Fib levels comes at 1.1294, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.1328, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.1208, 1.1149, 1.106
• Pivot resistance is noted at 1.1355, 1.1444, 1.1503

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