Hot forecast for GBP/USD on June 23, 2023
June 23, 2023 8:26 amVideo
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Yesterday, everything revolved around the Bank of England meeting, the results of which brought an extremely unpleasant surprise. Investors who chose not to take risks after the inflation report and decided to be cautious were absolutely right. Although at first glance, the main outcome of the meeting should have led to the pound’s growth, as the BoE raised interest rates by 50 basis points, while it was expected to increase from 4.50% to 4.75%. However, it all comes down to the subsequent comments and statements. In particular, the BoE justified its decision by referring to high inflation rates and the need to first bring it down to target levels. In other words, interest rates will continue to rise until inflation slows down to 2.0%. It doesn’t matter what happens to the economy, which is already firmly heading into a recession.
Equally surprising were the words of BoE Governor Andrew Bailey, as he blamed “unsustainable” pay rises for stoking inflation. In other words, the responsibility is placed on ordinary people with their excessive demands, and the fight against inflation is prioritized over economic growth. It’s no wonder that the pound started to decline somewhat, as these events can only cause confusion. Investors, in general, do not understand the logic behind the Bank’s actions, and this very risk sparks concerns.
Nevertheless, at least for today, we shouldn’t expect the pound to fall further. The British currency will receive some support from the retail sales report, which could slow down the decline from -3.0% to -2.4%. This should be enough for at least temporary market stabilization, giving investors time to comprehend the outcome of yesterday’s meeting. At the moment, the market remains somewhat perplexed.
The GBP/USD pair, despite speculative activity, is still in a corrective phase. This is shown by the price returning to the area around 1.2700.
On the four-hour chart, the RSI downwardly crossed the 50 middle line, thus reflecting bearish sentiment among traders.
On the same time frame, the Alligator’s MAs are intersecting each other, which points to a slowdown in the uptrend. However, there are no changes in the medium-term perspective, as the uptrend persists.
Outlook:
In this situation, keeping the price below 1.2700 will lead to extending losses. As long as this level acts as support, there is a possibility of a slowdown or price rebound.
The complex indicator analysis unveiled that in the short-term and intraday periods, indicators show a corrective move. In the medium-term, the upward sentiment is still in force.
The material has been provided by InstaForex Company – www.instaforex.com
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