At 3:02 PM GMT +4 Thursday 8th of May 2025, the Bank of England would likely trim interest rates by a quarter point to 4.25%, as it braces for the economic ripple effects of President Donald Trump’s escalating global trade tensions. Analysts also hint of more rate cuts ahead, as the uncertainty unleashed by US President Donald Trump’s global trade war hits growth.
Bank of England Governor, Andrew Bailey during last month’s International Monetary Fund meeting in Washington warned that Trump’s trade policies could trigger “growth shock” for the UK economy. The IMF reduced its 2025 UK’s growth forecast to 1.1% down from 1.6% it had been expecting earlier before the announcement of the tariffs.
Economists say a May rate cut is almost certain, though the MPC may hint a more cautious stance going forward.
POTENTIAL EFFECT OF UK’s RATE CUT ON GBPUSD AND LEVELS TO WATCH AS PER ANALYST
From technical lenses, GBPUSD on the daily TF has been in an upward trend thereby forming peaks and troughs. The pair created thirty-eight months high of 1.3443 on Monday 28th of April 2025, whilst trying to catch its breath, it was supported at 1.3255.
In view of the upcoming data, from BoJ’s MPC, market is somewhat calm whilst awaiting the catalyst on the radar.
Conventionally, a reduction in bank of England interest rate is expected to weaken its local currency, the British Pounds and being paired with the USD, the pair would likely tank with potential target around 1.3264 and 1.3048. On the flip side, a bullish momentum could cause a rally with potential target around 1.3430 and 1.3600. Breakout of these levels are not ruled out according to analysts
When narrowed to 2H, the pair is trapped in a range but currently looking bearish as per analysts. Where 1.3430 serves as resistance and 1.3264 acts as support. RSI is currently at 55.41 giving room to further downside.
Similar to D1 price action, a break below 1.3264 is expected to usher in 1.3168 and further dip would potentially target 1.3048. a break out of these levels are not ruled out according to analysts.
Bank of England Governor, Andrew Bailey during last month’s International Monetary Fund meeting in Washington warned that Trump’s trade policies could trigger “growth shock” for the UK economy. The IMF reduced its 2025 UK’s growth forecast to 1.1% down from 1.6% it had been expecting earlier before the announcement of the tariffs.
Economists say a May rate cut is almost certain, though the MPC may hint a more cautious stance going forward.
POTENTIAL EFFECT OF UK’s RATE CUT ON GBPUSD AND LEVELS TO WATCH AS PER ANALYST
From technical lenses, GBPUSD on the daily TF has been in an upward trend thereby forming peaks and troughs. The pair created thirty-eight months high of 1.3443 on Monday 28th of April 2025, whilst trying to catch its breath, it was supported at 1.3255.
In view of the upcoming data, from BoJ’s MPC, market is somewhat calm whilst awaiting the catalyst on the radar.
Conventionally, a reduction in bank of England interest rate is expected to weaken its local currency, the British Pounds and being paired with the USD, the pair would likely tank with potential target around 1.3264 and 1.3048. On the flip side, a bullish momentum could cause a rally with potential target around 1.3430 and 1.3600. Breakout of these levels are not ruled out according to analysts
When narrowed to 2H, the pair is trapped in a range but currently looking bearish as per analysts. Where 1.3430 serves as resistance and 1.3264 acts as support. RSI is currently at 55.41 giving room to further downside.
Similar to D1 price action, a break below 1.3264 is expected to usher in 1.3168 and further dip would potentially target 1.3048. a break out of these levels are not ruled out according to analysts.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.