Pound Sterling prepares for further rally as market mood remains upbeat
The Pound Sterling (GBP) demonstrates a corrective move as investors seek fresh cues about the interest rate peak from the Bank of England (BoE) for further guidance. The GBP/USD pair eases some gains inspired by bullish market sentiment and expectations that the 15th consecutive interest rate hike by the BoE will neutralize its policy divergence with the US Federal Reserve (Fed).
UK’s business confidence saw a surprising boost in August as firms hope that interest rates by the central bank will peak sooner. Corporations seem confident about the economic outlook and conveyed that wage growth will continue to remain strong and prices of goods and services at factory gates will elevate further. This could add worries for BoE policymakers, who are working relentlessly to achieve price stability. Pound Sterling skids below the round-level support of 1.2700 as the US Dollar extends recovery. The Cable delivers a mean-reversion move near the 20 and 50-day Exponential Moving Averages (EMAs). For a confident recovery, the asset has to stabilize above the aforementioned EMAs. Momentum oscillators are demonstrating that the bearish impulse has faded for now.