Event to watch today:
09:00 EET. GBP - Consumer Price Index
GBPUSD:

GBP/USD is holding near 1.3430 and remains supported by expectations surrounding the Bank of England’s policy rate. At its March 19 meeting, the regulator unanimously kept the rate at 3.75% and stressed that the rise in global energy prices is already affecting fuel and utility costs for British households. The Bank of England made it clear that it is ready to respond if the external shock begins to feed more strongly into domestic prices.
The pound is also being supported by the bond market. According to Reuters, yields on two-year UK government bonds rose by around 60 basis points in March, and market participants even began to consider the possibility of a rate increase later this year rather than a cut. This has boosted sterling’s appeal relative to other European currencies and revived demand for the pound after a weak start to the month.
Sterling still has weak points: a recent KPMG survey showed worsening consumer sentiment due to concerns over food and energy prices. However, for the currency market, the difference in rate expectations and the Bank of England’s readiness to maintain a firm stance for longer matter more at the moment. As long as this factor remains dominant, the baseline scenario for the current date stays moderately bullish for GBP/USD.
Trading recommendation: BUY 1.3430, SL 1.3400, TP 1.3520
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