Pound Sterling is under selling pressure near 1.2800 ahead of the BoE’s policy decision.

The Pound Sterling (GBP) loses Intraday ground and swings negative in Thursday’s London session. Ahead of the Bank of England’s Interest rate decision. Earlier, the GBPUSD pair had a massive surge. Fueled by Investors’ Increased risk Appetite as the Federal Reserve (Fed) held to its estimate of three rate cuts this year. This Influenced Investors’ interest in the US Dollar (USD). However, it recovered as the Fed’s Upwardly revised Product (GDP) Projections for 2024 limited the Downside.

UK inflation figure may allow the BoE to provide modestly dovish guidance.

The BoE is largely expected to hold interest rates unchanged at 5.25%. As the United Kingdom’s core Consumer Price Index (CPI). Policymakers’ preferred inflation indicator, rises by more than double the minimum rate of 2%. Investors will be looking for clues as to when the BoE will begin decreasing key borrowing rates. Currently, expectations are for a rate drop at the August policy meeting.

The BoE’s interest rate guidance could be slightly dovish. Since price pressures increased at a slower rate than expected in February. Annual headline and core inflation rates dropped to 3.4% and 4.5%, respectively. According to the UK Office for National Statistics (ONS). “food and restaurant prices were the strongest downward drags are compensated by motor fuels.”

It will be fascinating to see if recent mild inflation data has influenced the views of Monetary Policy Committee (MPC) members Catherine Mann and Jonathan Haskel. Both have voted for further interest rate hikes at recent meetings, despite the fact that the majority of the MPC has elected to retain rates at 5.25% in the last four policy meetings.

Daily Market movers: Pound Sterling falls as US Dollar recovers.

The Pound Sterling is under pressure as it rises over the round-level barrier of 1.2800 ahead of the Bank of England’s interest rate decision, which will be announced at 12:00 GMT. The BoE is anticipated to hold interest rates unchanged at 5.25% for the fifth time in a row. a row. Investors will pay special attention to policymakers’ voting patterns, notably those of Catherine Mann and Jonathan Haskel, who have been supportive of more interest rate increases.
The Bank of England is expected to continue its position that rate decreases should only be considered after obtaining confidence that inflation will return to 2% on a sustained basis. However, the February inflation readings, revealed on Wednesday, may have increased their confidence that inflation is heading in the correct direction. This might allow them to negotiate when to start lowering interest rates.
High service inflation, fueled by solid wage growth, has powered the UK’s tenacious inflation. Investors will closely monitor the wage growth outlook, as incomes are expanding at a faster rate than what is required to bring down Inflation can be sustained at 2%.

The US dollar rises as the Federal Reserve paints a positive picture of the US economy.

Meanwhile, the US Dollar Index (DXY) recovered from a day-low of 103.17. Boosted by an improved US economic outlook in the Federal Reserve’s most recent economic estimates. The Fed reaffirmed its projections of three rate cuts this year. At its monetary policy meeting on Wednesday. Despite the fact that inflation remained higher than projected in February. Fed members did not reduce their rate cut estimates.
The Fed maintained that rate decreases are only appropriate if it acquires more confidence. That inflation will fall steadily to the 2% target. Despite the recent acceleration in inflation, the underlying picture of pricing pressures moving in the right direction remains unchanged.