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GBP/USD Analysis: Crucial Trading Session

  • According to recent trading, the price of the pound sterling against the US dollar (GBP/USD) fluctuates near the 1.27 resistance despite the US Federal Reserve’s hawkish comments.
  • The attempts at an upward rebound in the price of GBP/USD stopped at the 1.2727 resistance level.
  • This is its highest level in two months, before settling around the 1.2710 level at the beginning of Wednesday’s trading session.
  • This includes the announcement of British inflation numbers and then the content of the minutes of the last meeting of the US Federal Reserve Bank.

GBP/USD Analysis Today 22/5: Crucial Trading Session (graph)

According to the platforms of Forex currency trading companies, the price of the US dollar (USD) fluctuated on Monday amid an influx of comments from US Federal Reserve officials. In this regard, the head of the Federal Reserve Bank in Atlanta, Rafael Bostic, maintained restrictive expectations, while noting the slow pace at which the US economy has slowed since the beginning of the year. Bostic emphasized that such a slowdown could gradually help reduce stable US inflation in the long term. At the same time, Bostic, who has adopted an increasingly hawkish stance in recent months, pointed to a large number of risks facing the Federal Reserve, pointing to continued inflation in the United States of America, geopolitical tensions, and policy uncertainty.

Added, “We talk a lot with business leaders and what they're all telling us is that things are slowing down,” the Fed policymaker added. The other thing executives say is that pricing power is weakening. My expectations are that US inflation will continue to decline this year and until 2025, but prices will fall at a slower pace than many expected. I think it will take some time before we know that for sure. Along with his colleagues, Bostic also stated that there were no changes in his outlook towards the upcoming monetary policy, while reiterating his expectations that easing is likely to occur in the last quarter of the year.

In contrast, sterling was mostly weak in early trading, with the lack of fresh releases from the UK prompting investors to look to the latest BoE comments. After a period of lukewarm rhetoric from policymakers and mixed macroeconomic releases, the market has been somewhat divided on when the BoE will begin its policy unwinding cycle. However, after a notable pushback against monetary easing from BoE hawks Michael Saunders and Catherine Mann last week, Ben Broadbent took a dovish stance in his speech on Monday morning.

Broadbent commented, "There is a range of views across the committee on this point. And in light of the rarity of such events in the past and the associated uncertainty about the future, this is entirely understandable. Whatever the views of its individual members, the MPC will continue to learn from the incoming data, and if things continue to evolve in line with its expectations - expectations that suggest policy should become less restrictive at some point - then the bank rate is likely to be cut at some point during the summer."

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    Technical forecasts for the GPB/USD pair today:

    Looking ahead, the lack of immediate releases from both Britain and the US may focus interest rate set comments from the Federal Reserve and Bank of England in the coming days. On the other hand, any jumpy trade may lead to investors favoring the safe-haven US dollar against its riskier rivals. Meanwhile, a wave of optimism may instead lead to the risk-sensitive pound sterling taking precedence. Moreover, British inflation numbers and the content of the FOMC meeting minutes have the most impact on the performance of the price of the British pound against the US dollar GBP/USD, which is still moving within an upward channel. Technically, the bulls’ control over the trend will be strengthened by moving above the resistance 1.2775, and expectations may increase for the psychological resistance 1.3000 if it stabilizes above the resistance 1.2840.

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    Mahmoud Abdallah
    About Mahmoud Abdallah
    Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

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