• GBP/USD fades a mid-European session spike that followed the BoE policy decision.
• Speculations that the BoE is nearing the end of the rate-hiking cycle weigh on the GBP.
• Investors now look to BoE Governor’s comments before placing fresh directional bets.

The GBP/USD pair jumps after the Bank of England announced its policy decision, albeit quickly retreats to a fresh daily low, below the 1.2300 round-figure mark in the last hour.

As was widely expected, the UK central bank hiked interest rates for the 10th time in a row, by another 50 bps to 4%, or the highest level since autumn 2008. In the accompanying monetary policy statement, the BoE noted that further tightening of monetary policy would be required if there were to be evidence of more persistent pressures. This, along with the prevalent US Dollar selling bias, assists the GBP/USD pair to attract some buying at lower levels.

Spot prices rally around 75 pips in the last hour, though struggle to capitalize on the move and remain below the 1.2400 round figure. Against the backdrop of looming recession risk, signs that inflation may have peaked have been fueling speculations that the BoE is nearing the end of the current rate-hiking cycle. This, in turn, acts as a headwind for the British Pound and keeps a lid on any meaningful upside for the GBP/USD pair, at least for the time being.

The market focus now shifts to the post-meeting press conference, where comments by BoE Governor Andrew Bailey might influence the Sterling Pound. Investors will look for fresh clues about future rate hikes, which, in turn, will play a key role in determining the next leg of a directional move for the GBP/USD pair.

Technical levels to watch