FX.co ★ Wiking | GBP/USD

The GBP/USD currency pair rises to 1.3300 early in Friday's European session. The British Pound (GBP) moves slightly higher against the US Dollar (USD), fueled by a positive comment from BoE Governor Andrew Bailey on UK GDP data. Andrew Bailey noted on Friday that the surge in energy prices seems to have had limited impacts on inflation in Britain so far. Still, it was too early to judge how significant any second-round impacts would be. However, a Reuters poll suggests most economists expect the UK's central bank to begin raising interest rates next month, after keeping rates on hold since the onset of the US-Iran war in February. In contrast, Federal Reserve (Fed) Chair Kevin Warsh offers no clue about October's monetary policy decision. Fed Chairman addressed the International Monetary Fund (IMF) conference on Friday, saying he does not "prejudge" interest-rate decisions, offering no clues on whether the central bank will hike rates or keep short-term rates steady at the upcoming October 27-28 meeting. Meanwhile, San Francisco Fed President Mary Daly and Fed Vice Chair for Supervision Michelle Bowman suggest a rate increase is unnecessary right now. The market prices in an almost 27.1% chance of a rate hike in October this year, according to the CME FedWatch Tool. UOB Group strategists note that their medium-term view on GBP/USD remains unchanged despite the recent spike in volatility. On Monday, when the spot was trading around 1.3235, they noted that "GBP is expected to trade in a range between 1.3170 and 1.3280." After this, the Pound "has rallied to around 1.3280 with a high of 1.3275 but soon plunged to a low of 1.3137, bouncing back from the low point." UOB believes the recent move "was not accompanied by any visible increase in the bearish momentum" and that "the decline to 1.3137 seems to be more of a range expansion rather than the beginning of a fresh downtrend." In the future, they feel "our base case is for GBP to continue trading within the 1.3135 to 1.3280 range and for the currency to clearly breach either of the two ranges before a clear direction can be established." The FXS Speechtracker assigns a speech score of 6.2/10, down from Governor Bailey's record 6.4/10, signalling a relatively soft tone overall. Persistent "enormously frustrating" above-target UK inflation, along with statements about the UK economy's resilience but lack of strength, suggests a slight hawkish tilt, as the BOE is not ready to signal an imminent easing bias in GBP. But Bailey's statement that "it is too early" to assess second-round effects, along with low wage-price-spiral pressures and businesses' focus on cutting costs, softens the hawkish tone. The comment that Middle East news is the single most influential factor in UK gilt yield movements suggests that foreign risk events, rather than domestic data, are driving UK interest rates and GBP. On the daily chart, GBP/USD trades below the 100-day simple moving average (SMA) and the upper Bollinger band, limiting the pair's upside potential as the RSI improves toward its neutral 50 level. The price continues to trade above the middle Bollinger band, reflecting consolidation amid bearish sentiment as long as the pair does not move back above the clustered resistance levels. To the north, the first resistance is at the upper Bollinger band of 1.3340, followed by the 100-day SMA at 1.3390, where stronger selling pressure should develop. To the south, the immediate support is seen at the middle Bollinger band of 1.3250, followed by additional support at the lower Bollinger band of 1.3160.