The GBP/USD price was in a tight range during the Asian session as investors waited for the upcoming interest rate decision by the Bank of England (BOE). The pair is trading at 1.3565, which is about 1.5% above the year-to-date low.
BOE rate decision preview
The BOE will become the second major central bank to deliver its decision this week after the Reserve Bank of Australia. Analysts expect that the bank will deliver a relatively hawkish stance.
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For example, they expect that the BOE will hike interest rates by about 0.25% in its first decision of the year. If this happens, it will be the first time that the bank has hiked rates in two consecutive meetings in a row.
The fact that the BOE will hike rates is the main reason why the GBP/USD pair has been on a bullish trend in the past few days.
Economic data from the US is supportive of a more hawkish BOE decision. For example, data published in January showed that the UK consumer price index jumped to the highest level in more than 30 years as energy prices rose.
Further data revealed that the UK retail sales have been relatively strong even though they declined modestly in December. The UK unemployment rate has been in a gradual decline and currently stands at the lowest level since the pandemic started.
Earlier this week, data by Nationwide Society showed that the UK home price index continued its bullish trend in January.
Therefore, with these numbers, there is a likelihood that the BOE will be hawkish. In addition to the 25 basis points rate hike, the bank will likely hint that it will offer more rate hikes later this year. Also, the bank could surprise and hike by 0.50%.
GBP/USD forecast
The GBP/USD pair has been in a strong bullish trend in the past few days. Along the way, it has managed to move above the 50-day and 25-day moving averages. On the 4H chart, it has moved slightly above the first support of the Andrews Pitchfork tool. It has also moved between the 23.6% and 38.2% Fibonacci retracement levels.
Therefore, the pair will likely keep rising ahead of the BOE decision. If this happens, the next key target will be at 1.3650.
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Source: https://invezz.com/news/2022/02/03/gbp-usd-prediction-boe-rate-decision-preview/