The GBP/USD exchange rate soared after the Federal Reserve implemented a 25 bps interest rate hike to reach 5.25-5.50%. Such an approach came in line with the overall market expectations. Fed Chair Jerome Powell’s accompanying press conference hinted at a data-dependent approach. That way, he left the possibility of a September rate hike uncertain. As the bank continues its fight against inflation, analysts have mixed opinions on future rate increases.
US GDP data, due later, will reveal a Q2 expansion of 1.8%, driven by robust consumer spending and eased inflation fears. America’s durable goods orders, consumer spending, and personal consumption index will also be closely monitored. Meanwhile, the Bank of England (BoE) is expected to follow suit with a 0.25% interest rate hike in its upcoming meeting, given the UK’s persistently high inflation levels.
The GBP/USD exchange rate rallied following the Fed’s decision, with the pair approaching the first support of the Andrews pitchfork. The Relative Strength Index (RSI) is nearing the overbought level, suggesting continued upward momentum. The next key resistance level at 1.3050 is the target for buyers, while a potential retreat may see the pair move below the key support at 1.2900.
Pound/dollar traders adopt a cautious stance as the US Q2 GDP data release draws near. Sterling surged to a high of 1.2977, its highest level since July 19th, following the Federal Reserve’s decision to hike interest rates.
Fed Chair Jerome Powell’s non-committal approach to a September rate hike prompted the GBP/USD exchange rate to climb further. The market remains attentive to the US GDP data, which should show a Q2 expansion of 1.8%, indicating a strong performance driven by robust consumer spending.
The US Dollar weakened after Powell’s press conference, leading to GBP/USD reaching highs of $1.2950. However, traders exercise caution amid the data release, keeping an eye on potential economic indicators for future market movements.
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