GBP/USD hangs near daily low, flirts with 1.2300 after BoE raises interest rate by 50 bps
- GBP/USD comes under some selling pressure on Thursday, though shows resilience below 1.2300.
- A solid USD recovery from six-month low triggers the initial leg of the intraday corrective decline.
- A 7-2 BoE MPC vote split for a 50 bps rate hike fails to impress bulls or lend any support to the pair.
The GBP/USD pair remains heavily offered through the mid-European session and refreshes the daily low after the Bank of England announced its policy decision on Thursday. Spot prices, however, show some resilience below the 1.2300 mark and quickly recover around 30 pips in the last hour.
As was widely anticipated, the UK central bank raised the interst rate by 50 bps at the end of the December policy meeting. This marked the ninth straight rate hike, though was relatively smaller than November's supersized 75 bps increase amid signs of easing inflationary pressure. Furthermore, a dovish MPC vote spilt, with two members favouring a no change in policy rates, weighs on the British Pound.
The US Dollar, on the other hand, stages a goodish intraday bounce from a six-month low touched earlier this Thursday amid a hawkish assessment of the Federal Reserve's decision on Wednesday. Apart from this, the risk-off impulse - as depicted by a sharp fall in the equity markets - further benefits the safe-haven greenback and contributes to the offered tone surrounding the GBP/USD pair.
Traders now look to the US economic docket - featuring the release of monthly Retail Sales, the Philly Fed Manufacturing Index, Weekly Initial Jobless Claims and Industrial Production data. This, along with the post-ECB volatility and the broader risk sentiment, will influence the USD price dynamics and produce short-term trading opportunities around the GBP/USD pair.
Technical levels to watch