FX.co ★ A12 | GBP/USD

In the early hours of Asian trade on Thursday, the British pound made gains against the US dollar. This was due to the dollar weakening after the Federal Reserve decided to keep interest rates unchanged. The Fed's choice to maintain rates, as predicted by analysts, was seen as beneficial for major currencies. This comes at a time when there are concerns about rising inflation, which has led central banks worldwide to tighten their monetary policies. The Federal Reserve kept its benchmark interest rate at a range of 5.25% to 5.50%, the highest it has been in more than twenty years. The central bank indicated that it has no plans to reduce rates in the near future, highlighting its dedication to combating inflation. This differs from the Bank of England's expected decision to lower borrowing costs later this year. Investors have differing opinions on the future path of the GBP/USD pair. Some believe that the pair may test the support level of 1.2574, which was seen in March and April and could now act as a barrier. If the pair breaks above this level, it could open the way for a move towards the high of 1.2682 that was reached in April. However, others point to the 200-day simple moving average at 1.2552 as a potential challenge for those who are optimistic about the market.

The GBP/USD pair reached a peak of 1.2512 today, but then pulled back. This lack of continued buying suggests that if Jerome Powell, the Federal Reserve Chair, takes a more aggressive approach in his upcoming comments, the pair could test the lowest point of the day at 1.2466. If it continues to drop, there is additional support at the lowest point on April 26th, which was 1.2448, followed by 1.2400. In general, the GBP/USD pair is being influenced by a conflict between the Bank of England, which has a more cautious approach, and the Federal Reserve, which has a more aggressive approach. The direction of the pair will likely depend on what central bank officials say in the future and what economic data is released.