Data released on Wednesday morning by the UK Office for National Statistics suggests that inflation has not yet been brought under control, and they left little doubt that the Bank of England will raise interest rates again by 25 bp at its meeting on Thursday, up to 4.75%.
Fresh data on inflation, which increased expectations regarding tomorrow's results of the meeting of the Bank of England, had a negative pressure on the pound.
Most economists believe that the Bank of England will continue to raise interest rates to at least 5.5% (currently 4.50%). Market participants and economists want to receive confirmation of their expectations from the leadership of the British Central Bank tomorrow, and the tougher the accompanying statements are, the stronger the market and the pound will react to them.
In this regard, we still hope for the hawkish rhetoric of the accompanying statements from the bank's management and for the strengthening of the pound and the growth of the GBP/USD pair after tomorrow's meeting of the Bank of England.
This will give the pound additional bullish momentum and allow the GBP/USD pair to finally break through the resistance zone near the key level 1.2800 in order to break out into the long-term bull market zone (for more details and an alternative scenario, see GBP/USD: dynamics scenarios for 06/21/2023).
However, if the US dollar allows it, i.e. if it resumes its decline. In this regard, market participants will receive new information on this matter: today and tomorrow, Fed Chairman Jerome Powell will speak in Congress, including highlighting the prospects for the monetary policy of the US Central Bank (for more details on the dynamics of the dollar and market expectations, see today's review “Dollar: Buyers are waiting for new drivers”).
In an alternative scenario, GBP/USD will resume growth. A confirmed breakdown of the key long-term resistance levels 1.2800 and 1.2848 will bring the pair into the zone of a long-term bull market, directing it towards the upper border of the rising channel on the weekly chart and towards the strategic resistance level 1.4335, which separates the global GBP/USD bear market from the bull market.
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