Inflation and economic growth remain on the BoE’s main agenda
GBP/USD rise has slowed below the 1.30 region.
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Last week, several central banks made policy announcements, including the and the . As expected, both kept interest rates unchanged, and their statements offered little new information. As a result, financial markets had a muted reaction.
With monetary policy unchanged, attention remains on economic and political developments driven by the new U.S. administration. The sharp rebounds in U.S. stock indices early in the week suggest that fears of a full-scale tariff war may be easing.
BoE Faces Tougher Decisions Ahead
While last week’s BOE decision was expected, policymakers will likely remain passive. Conflicting macroeconomic data make future moves uncertain, with inflation—now at 3% year-over-year—drawing market attention
Figure 1: UK Inflation Data
This week’s data may align with forecasts, but the broader outlook still limits room for rate cuts. While trends do not support easing, weaker economic indicators, especially , provide some justification. After a strong reading last month, March’s data was disappointing, with GDP growth at just 1% year-over-year—well below expectations.
Figure 2: UK GDP Data
Given this uncertainty, the market will look to the Bank of England for clarity on its policy direction and future interest rate decisions.
In the US, recession fears have shifted expectations for a 25bp rate cut from September to June, with a 60% probability, despite persistent . This highlights how economic data can sometimes outweigh inflation concerns for central banks.
Bulls Lose Momentum
GBP/USD has been in an uptrend since the start of the year, driven by a weaker . Buyers pushed the pair to the key 1.30 level, where gains have slowed. However, with little selling pressure, the pair has entered a period of consolidation.
Figure 3: Technical analysis of GBP/USD
A breakout above the current consolidation would confirm a move past $1.30, with the next medium-term target at $1.34. If a deeper correction occurs, key support lies at $1.28, where the upward trend line converges.
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