The pound strengthened yesterday following the Bank of England’s announcement, lifting against other major currencies. Although the Official Bank Rate held steady at 3.75%, markets were caught off guard by a notably hawkish tone, a sharp contrast to the more dovish commentary from the February meeting.
Media reports highlighted:
→ None of the nine MPC members voted for a rate cut;
→ References to the possibility of future rate reductions were removed from the official statement.
The central bank’s stance suggests it is prepared to raise rates should the energy-driven inflationary pressures from the Middle East intensify. This hawkish signal helped GBP/USD break above the upper limit of the channel it had been trading in since late January.
Technical Outlook – GBP/USD
Recent price action in March indicates that 1.3250 remains a key support level. Meanwhile, following the BoE announcement, bulls may find an additional support around 1.3374, a level associated with:
→ Market resistance on 18 March;
→ Yesterday’s breakout of the channel’s upper boundary.
However, the long upper wick on yesterday’s candle (highlighted by the chart arrow) signals renewed bear activity. Even if bullish momentum continues, gains may be limited by resistance levels higher up, such as:
→ Psychological threshold at 1.3500;
→ The high from 10 March;
→ The top of the doubled red descending channel.
Overall, while bulls have momentarily regained control, the chart suggests that GBP/USD could encounter strong resistance at higher levels, and traders should monitor key technical points closely in the coming sessions.
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