empty
23.07.2024 12:54 AM
The Bank of England might forgo a rate cut on August 1 as the pound gathers strength to rise. Overview of GBP/USD

Last week, a substantial block of macroeconomic data for the UK was released. The Bank of England's meeting, scheduled for August 1, is approaching, and at first glance, the BoE has grounds to consider its first quarter point rate cut from the current 5.25%.

Consumer inflation in June remained unchanged, while overall inflation rose by 2% in annual terms, the same as the previous month, and core inflation increased to 3.5%. Despite both figures meeting forecasts, the market suggests that the chances of a rate cut have diminished, as service sector inflation also remained steady at 5.7%, above the forecast of 5.1%.

This image is no longer relevant

At the same time, retail sales in June fell more sharply than forecast, with a decline of 1.2% compared to a 2.9% increase the previous month.

Since service prices remained consistently high and inflation was unchanged, the markets have downwardly revised the likelihood of a rate cut on August 1 from 50% to 35%. This is a bullish signal for the pound, which rose immediately after the data was released.

On Wednesday, July 24, the PMI indices for July will be released, serving as key data points before the BoE's imminent decision. All PMI indices are expected to show growth, confirming overall economic expansion. If the data aligns with forecasts, it will be another bullish factor for the pound, as it would allow the BoE to justify not cutting rates on August 1. Regardless, any potential rate cut is already priced in by the market, while a decision not to cut rates would allow the pound to resume its upward trend towards the annual high.

According to the CFTC report, the net GBP long position increased by $4 billion to $10.777 billion over the reporting week. Major speculators' positions in the pound are firmly bullish, and the overall net long position is at its highest level since the Brexit vote. Clearly, sentiments have shifted following the elections. The price is above the long-term average and aimed at further growth.

This image is no longer relevant

Last week, the pound reached an annual high of 1.3043 and has a good chance of rising towards 1.3141, which we identified as the main target in the previous review. The continuation of the upward trend was hindered by a global information breakdown last week and Biden's announcement of his withdrawal from the presidential race, both triggering increased demand for safe-haven assets. Nevertheless, the chances for further growth remain high despite the threat of a correction. Our target is 1.3141, with support at 1.2890.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Evgeny Klimov
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

EUR/USD Overview – August 20: Just a Pause. Period

The EUR/USD currency pair on Tuesday (as in recent days) traded in an ultra-calm manner. On Monday, it declined, on Tuesday, it grew slightly, but overall, recent moves have taken

Paolo Greco 03:38 2025-08-20 UTC+2

GBP/USD Overview – August 20: Technicals and Nothing but Technicals

On Tuesday, the GBP/USD currency pair continued its sluggish downward movement. In principle, there is no point discussing anything other than the technical picture right now. This week, apart from

Paolo Greco 03:38 2025-08-20 UTC+2

Yen Remains in Range

Japan's real GDP grew by 0.3% quarter-on-quarter (1.0% y/y) in the second quarter of 2025, exceeding Bloomberg's market forecast (+0.1% q/q, +0.4% y/y). This marked the fifth consecutive quarter

Kuvat Raharjo 00:58 2025-08-20 UTC+2

NZD/USD. RBNZ August Meeting: Preview

On Wednesday, August 20, the Reserve Bank of New Zealand will conclude its latest meeting, where it may reduce the interest rate by 25 basis points—from 3.25% to 3.0%

Irina Manzenko 00:58 2025-08-20 UTC+2

Four Reasons to Sell the Dollar

The euro is set to strengthen against the U.S. dollar. The key question is when EUR/USD will be able to resume its upward trend. JP Morgan believes the main currency

Marek Petkovich 00:58 2025-08-20 UTC+2

EUR/JPY. Analysis and Forecast

Uncertainty over a Bank of Japan rate hike and hopes for a peace agreement between Russia and Ukraine undermine the yen. Today, Tuesday, for the second

Irina Yanina 19:50 2025-08-19 UTC+2

USD/JPY. Analysis and Forecast

Diverging expectations for Bank of Japan and Federal Reserve policy support the low-yielding yen, while hopes for a peace agreement between Russia and Ukraine limit the safe-haven yen's advance

Irina Yanina 19:33 2025-08-19 UTC+2

Gold Prices Remain Nearly Unchanged

Gold prices were little changed as traders assessed U.S. efforts to end the military conflict in Ukraine while counting down to the Federal Reserve's annual meeting in Jackson Hole. Investors

Jakub Novak 10:57 2025-08-19 UTC+2

What Could Help the Pound Return to Growth

The British pound is losing ground even though money market expectations are rising that the Bank of England will keep interest rates at 4% until the end of the year

Jakub Novak 10:52 2025-08-19 UTC+2

The Market is Frozen at the Top. Will it Break Down?

Expectations of a September Federal Reserve rate cut and strong corporate earnings are the two key drivers keeping the S&P 500 near record highs. Aggregate earnings per share rose 11%

Marek Petkovich 10:18 2025-08-19 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.