GBP/USD nudged slightly higher on Thursday after the release of the BoE’s monetary policy report for August. The currency pair was trading at $1.3911.
According to the latest report published by the Bank of England (BoE), despite the spread of the Delta variant, the impact of Covid on the country’s economy has been fading over time. Partly reflecting the spread of the Delta variant, UK’s GDP is expected to grow by 3% in the third quarter. However, this will be weaker than the estimated growth in May’s report.
UK’s CPI inflation is projected to increase from 2.5% in 2021 Q3 to around 4% in Q4 2021. Higher energy prices are expected to boost the inflation rise. However, the BoE expects the inflation surge to be transitory.
The Monetary Policy Committee (MPC) unanimously agreed to maintain Bank Rate at 0.1%. The committee also voted for the Bank of England to maintain the stock of sterling non-financial bond purchases at £20 billion.
The committee voted for the Bank of England to continue with its existing program of UK government bond purchases. The BoE will maintain the target of the government bonds stock purchases at £875 billion and the total target stock of asset purchases at £895 billion.
The report was published ahead of the weekly initial jobless claims data in the United States. Economists polled by Dow Jones expect the initial claims to fall to 384,000 down from the 400,000 in the previous week.
GBP/USD Technical Outlook
The GBP/USD pair has been on an upward trend for the past three weeks. At the time of writing, the pair was trading 0.27% higher at $1.3927.
On the 4-hour chart, the currency pair is trading above the 25 and 50-day exponential moving averages (EMAs) which is a bullish sign. It hit an intraday bounce of $1.3946.
A move above the resistance level at $1.3500 might push the price to find resistance at $1.3983. On the flip side, a push below its intraday low of $1.3872 will have the bears eyeing the next support level at $1.3841.