GBPUSD technical analysis: 50-dma breakout

GBPUSD update

The cable (GBP/USD) rose to 1.226, smashing the 50-day moving average for the first time since early February 2022, as speculators increased their expectations for a 50 basis point BoE rate hike this week, which would be the largest interest rate increase in 27 years, pushing borrowing costs to 1.75%, the highest level since 2009.

With GBIRYY running at 9.4% year on year in June, more aggressive action is needed to put out the fire and since economic activity and the labour market continue to demonstrate surprising resilience, the market anticipates that the BoE's board has more room for marked and front-loaded rate increases.

Next resistance is now seen at 1.233 (June 27 highs) and 1.248 (early June support). The 14-day RSI spiked above 60, its highest since mid-January, and MACD is above zero for the first time since February.