British pound higher as BoE holds rates

<p><a href="https://api.addthis.com/oexchange/0.8/forward/facebook/offer?url=https%3A%2F%2Fwww.marketpulse.com%2Fnews-events%2Fcentral-banks%2Fbritish-pound-higher-as-boe-holds-rates%2Fkfisher&amp;pubid=ra-525512e4690e068c&amp;title=Marketpulse%20%7C%20Home&amp;ct=1" target="_blank"><img src="https://cache.addthiscdn.com/icons/v3/thumbs/32×32/facebook.png" border="0" alt="Facebook" /></a><a href="https://api.addthis.com/oexchange/0.8/forward/twitter/offer?url=https%3A%2F%2Fwww.marketpulse.com%2Fnews-events%2Fcentral-banks%2Fbritish-pound-higher-as-boe-holds-rates%2Fkfisher&amp;pubid=ra-525512e4690e068c&amp;title=Marketpulse%20%7C%20Home&amp;ct=1" target="_blank"><img src="https://cache.addthiscdn.com/icons/v3/thumbs/32×32/twitter.png" border="0" alt="Twitter" /></a><a href="https://api.addthis.com/oexchange/0.8/forward/email/offer?url=https%3A%2F%2Fwww.marketpulse.com%2Fnews-events%2Fcentral-banks%2Fbritish-pound-higher-as-boe-holds-rates%2Fkfisher&amp;pubid=ra-525512e4690e068c&amp;title=Marketpulse%20%7C%20Home&amp;ct=1" target="_blank"><img src="https://cache.addthiscdn.com/icons/v3/thumbs/32×32/email.png" border="0" alt="Email" /></a></p><p>The British pound is higher on Thursday. In Tuesday&#8217;s North American session, GBP/USD is trading at 1.2731, up 0.32%.</p>
<p><b>BoE holds rates in a three-way split</b></p>
<p>The Bank of England maintained the benchmark rate at 5.25% at today&#8217;s meeting, as expected. The BoE left rates unchanged for a fourth consecutive time, further evidence that the steep rate-tightening cycle is very likely over. What was most unusual was the MPC vote, with a rare three-way split. Six members voted for the pause, two members preferred to raise rates by a quarter-point and one member voted to trim rates by a quarter-point. This points to a wide range of views at the central bank over rate policy, but Governor Bailey still commanded a comfortable majority at today&#8217;s meeting.</p>
<p>The BoE reiterated its &#8216;higher for longer&#8217; stance, saying monetary policy would need to remain restrictive until inflation returned to the 2% target sustainably. At the same time, the BoE statement sounded more dovish than previous statements, saying that &#8220;the risks to inflation are more balanced&#8221; and removing a line about further tightening.</p>
<p>UK inflation has been falling sharply, although it did tick up to 4.0% in December, up from 3.9% in November. The BOE said today that it expects inflation to fall to 2% in the second quarter of this year due to lower energy prices. However, it added that this level won&#8217;t be sustainable and inflation is expected to rise back above target in the second half of the year.</p>
<p>In the US, today&#8217;s numbers were mixed. Unemployment claims rose to 224,000, up from an upwardly revised 215,000 a week earlier. The ISM Manufacturing PMI accelerated to 49.1 in January, up from 47.1 in December and its highest level since October 2022. Still, manufacturing remains in decline and hasn&#8217;t shown growth since October 2022, when it recorded a reading of 50.2. We&#8217;ll get a look at nonfarm payrolls on Friday, which is expected to drop to 180,000 in January, down from 216,000 in December.</p>
<p>.</p>
<p><strong>GBP/USD Technical</strong></p>
<ul>
<li>GBP/USD is testing resistance at 1.2740. Next, there is resistance at 1.2772</li>
<li>There is support at 1.2711 and 1.2679</li>
</ul>
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