GBP – The pound maintained its gains, testing trendline resistance again

The Bank of England kept interest rates unchanged at 3.75% last Thursday, in line with market expectations, but the central bank's forward guidance was rather vague and failed to provide additional impetus for the pound. The minutes of the meeting showed that the Monetary Policy Committee decided to keep rates unchanged by a vote of six to three. At the June meeting, only two votes supported immediate action. The Bank of England maintained its policy guidance, stating that the Monetary Policy Committee was prepared to act in case of persistent high inflation, thus preserving policy options. The Monetary Policy Committee stated that there were clear signs that domestic inflationary pressures were easing, and so far there was little evidence that the energy shock had driven up wage demands and led to price increases in other sectors. Most of the members who supported keeping rates unchanged also indicated that their strategy might be adjusted if the war ended quickly. Two members said they would consider a rate cut in that scenario.

The British pound against the U.S. dollar was capped by a descending trendline resistance mid-month, followed by a significant pullback. After hitting a low of 1.3273 last Tuesday, it rebounded sharply, approaching the 1.35 level on Friday, which will serve as current resistance. The nearby descending trendline is located at 1.3520. A clear break above this area could trigger another upward move for the pound against the dollar, potentially reaching the May high of 1.3657 and then 1.38, with a key target at the 1.40 level. The supporting levels will be seen at 1.34 and the 25-day moving average at 1.3370, with stronger support expected at 1.33 and 1.3210.

Forecast range:
Resistance 1.3500/20* - 1.3657 – 1.3800 – 1.4000*
Support 1.3400 – 1.3370 – 1.3300 - 1.3210

Key Focus:
Monday
UK July Manufacturing PMI (16:30)
 

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