GBP/USD Recovers Slightly, Focus Shifts to BoE
GBP/USD strengthened in the Asian session on Thursday (June 18th), moving away from its lowest level since April 7th around 1.3260 reached in the previous session. The pair re-penetrated the 1.3300 level, aided by limited US dollar weakness following a strong rally fueled by hawkish signals from the Federal Reserve.
GBP/USD also supported by improving risk sentiment after US President Donald Trump and Iranian President Masoud Pezeshkian signed a memorandum of understanding electronically. The agreement aims to end hostilities between the two countries and reopen the Strait of Hormuz. Trump also stated that the 60-day negotiation period to reach a final agreement on Iran's nuclear program is not a rigid deadline.
However, GBP/USD's upside remains limited as the outlook for the US dollar remains strong. The Fed maintained interest rates in the 3.50% to 3.75% range but removed policy language that had previously signaled a rate-cutting bias. The median projection for the final 2026 Fed Funds Rate also rose to 3.8% from 3.4%, indicating the committee sees the possibility of at least one rate hike this year.
In the UK, expectations for a Bank of England interest rate hike have begun to ease after the latest inflation data showed no significant additional pressure. The Office for National Statistics reported that headline CPI held at 2.8% annually in May, while core inflation rose 2.6%, slightly below market expectations. This data reinforces the view that the BoE is likely to maintain interest rates.
The market's next focus will be on today's BoE decision, the direction of the US dollar, and investor response to Fed policy signals. As long as the Fed remains more hawkish while the BoE tends to be cautious, GBP/USD's recovery could potentially remain limited despite improving global risk sentiment. (asd)
Source: Newsmaker.id
