GBP/USD Pullback Coming after BOE, ECB, and FED!

Today, we will analyze the GBP/USD exchange rate situation, which has extended its daily bullish trend and reached the level of 1.2800 for the first time since early August. This increase has been fueled by widespread selling pressure on the US dollar following the Federal Reserve's announcement and the relatively strong British pound, thanks to the bullish guidance from the Bank of England (BoE). In recent sessions, GBP/USD has gained bullish momentum, reaching a 10-day high above 1.2600. The short-term technical outlook for the pair appears to be bullish, but it's important to note that the Bank of England's decisions could influence the market later in the day. The Federal Reserve has kept the interest rate unchanged at 5.25%-5.5% following the December meeting, as expected. The revised dot plot, formally known as the "Summary of Economic Projections," indicates an expected 75 basis points rate reduction in 2024. In the post-meeting press conference, Fed Chairman Jerome Powell stated that they don't want to make the mistake of keeping rates too high for too long. Powell also emphasized that there is a general expectation among policymakers that rate cuts will be a topic of conversation in the future. This accommodative tone from Powell triggered a rally in major Wall Street indices, causing a sharp decline in the US dollar (USD) index and US Treasury bond yields. Later in the session, we expect the Bank of England to leave the key interest rate unchanged at 5.25%. After the November meeting, the BoE stated that risks to inflation projections were still skewed to the upside. Meanwhile, three members of the Monetary Policy Committee, Megan Greene, Jonathan Haskel, and Catherine Mann, voted to raise the policy rate by 25 basis points at that meeting. If the vote is unanimous in keeping the policy rate unchanged in December, the pound sterling could come under pressure with an immediate reaction. Market participants will closely watch the language used in the official statement, especially regarding inflation and growth outlook. If the BoE maintains a cautious tone about inflation, losses in the pound sterling may remain limited. On the other hand, GBP/USD could turn south if the BoE acknowledges the recent disappointing growth data and softer wage inflation readings. Personally, I expect a price retracement to retest the upper side of the bullish channel and the bearish trendline with a target at 1.2580.