Jakarta, GIC Trade – The pound has printed a new weekly high of 1.2653 amid a sell-off in the USD Index after the release of unimpressive US employment data has strengthened the Federal Reserve's neutral policy for the June meeting.
Meanwhile, the historically high UK food inflation rate and labor shortage support another interest rate hike from the Bank of England (BOE). 
 
The GBP/USD pair has shown a remarkable rally and is expected to extend its gains as the Bank of England (BoE) is preparing for a new interest rate hike this week. 
 
The Bank of England's (BoE) interest rate policy on Thursday will be closely watched by market participants as UK inflation shows no signs of slowing while the central bank has tightened its monetary policy significantly.
 
The overall market mood is quite cheerful, but a cautious approach is advised ahead of the United States Consumer Price Index (CPI) data, which will be released on Wednesday.
 
The US Dollar Index (DXY) is struggling to find support and has updated its daily low near 101.12. Further declines in the USD Index look promising as further delays in raising the US debt ceiling will impact the long-term outlook of the US economy dramatically. 
 
Meanwhile, the stable performance of the U.S. labor market for April has reduced the likelihood of further interest rate hikes from the Federal Reserve (Fed). This has increased the demand for US government bonds. The 10-year US Treasury yield is further falling below 3.43%.
 
Fundamentally, the continued interest rate hike from the British central bank (BOE) supports the pound sterling currency higher. Then how technically, see the following analysis:

Technical Analysis

 
GBP/USD on the 1-hour period tried to move upwards touching the resistance level at 1.26900 until heading towards the next resistance level at 1.27430. The upward trend can also be seen from the FXBot template, where the GBP figure is higher by 4.1 than the USD figure of 0.1. While the bullish bias is also supported by a buy signal indicated by a green arrow.

Forex Today Analysis is a fundamental and technical view used by the author, not a suggestion or a solicitation. To get more information click on the image below