The British pound climbed to a 3-week high against the US dollar yesterday. The move was driven mostly by USD weakness. However, traders were also offered a speech from BoE Chief Economist Pill yesterday and it showed some changes in the economist's attitude. While Pill had stressed previously that the Bank will act forcefully to bring the inflation back to its target from a 4-decade high, he pointed to easing inflationary pressures yesterday. Pill noted that the labor market is weakening and that should economic slack emerge in-line with BoE's forecasts, the threat of inflation becoming persistent would ease. This was an important insight as it showed that BoE starts to see a turn on the labor market and weakness in the jobs market may be an important argument to reconsider any additional tightening. GBP traders will get to hear from Governor Bailey today at 10:10 am GMT. BoE Governor will moderate a panel discussion on central bank independence organized by Riksbank. GBPUSD may also move in the early afternoon as Fed Chair Powell is set to deliver a speech at 2:00 pm GMT. Powell will also speak on central bank independence.
Taking a look at GBPUSD chart at D1 interval, we can see that the pair has recently bounced off an important support zone in the 1.1880 area. This area is marked with previous price reactions, 200-session moving average and a lower limit of the Overbalance structure. Defending these hurdles, especially the lower limit of the Overbalance structure, hints that pullback started in mid-December 2022 was just a brief correction. A key resistance zone to watch now is 1.2430 area, marked with the previous local high.
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Source: xStation5
