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02.02.2023 08:25 AM
Breaking forecast for GBP/USD on February 2, 2023

The FOMC meeting results led to a confident increase in the pound sterling. As a result, the currency returned to the upper limit of the range, where it has been trading for two weeks in a row. However, the BoE meeting is the main driver of the pound sterling. The fact is that traders priced in a slower key rate hike by the Fed long ago. Now, the question is whether the Bank of England will do the same. However, there is no answer to this question. Today, the BoE is expected to raise the benchmark rate to 4.0% from 3.5% that is by 50 basis points. A lot will depend on the comments that will be provided after the meeting. If the UK regulator drops a hint about a possible slackening of the key rate hike, the pound sterling will return to the lower limit of the range. Then, pressure on the UK currency will rise amid the fact that the key rate in the US will remain higher than in the UK. This, in turn, will launch a long-lasting downtrend, thus allowing the currency to leave the sideways channel. The pound sterling will have a chance to rise if the BoE announces a further monetary policy tightening.

UK Key Interest Rate

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Yesterday, the pound/dollar pair managed to rise by approximately 80 pips. However, this movement failed to lead to considerable changes. The quote continued hovering within the sideways channel of 1.2300/1.2440.

On the four-hour chart, the RSI technical indicator is hovering in the upper area of 50/70, which corresponds to movement from the lower limit to the upper one. Notably, the indicator is providing a mixed signal because of the flat. On the daily chart, the situation is a bit better. The indicator is stably moving in the upper area of 50/70, which corresponds to the direction of the trend.

On the four-hour chart, the Alligator's MAs are intersecting each other, which points to stagnation. On the daily chart, the indicator is pointing to the bullish sentiment and the MAs are headed upwards.

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Outlook

Until the price breaks either limit of the range, it may bounce. From the technical point of view, this may lead to a decline in the volume of long positions near the area of 1.2400/1.2440.

The main strategy is still based on a breakout since only this will alter the market situation.

In terms of the complex indicator analysis, we see that in the short-term and intraday periods, indicators are providing mixed signals because of stagnation. In the mid-term period, indicators are pointing to the upward trend, which began last autumn.

Dean Leo,
Analytical expert of InstaForex
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