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Stuck in a Tight Range Ahead of Jackson Hole

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  • BoE governor Bailey is expected to maintain a hawkish stance.
  • BoE forecasted a recession in the UK by the end of the year.
  • Markets expect the BoE to raise rates by 50bps in the next meeting.

Today’s GBP/USD price analysis is slightly bearish ahead of the Jackson Hole gathering. The sterling recovered some of its losses versus the dollar on Thursday. However, it is still hovering around a 2-1/2 year low.

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On Thursday, the Jackson Hole Symposium hosted by the Kansas City Federal Reserve began. BoE Governor Andrew Bailey will attend the three-day conference with Fed Chair Jerome Powell and other central bankers.

The pair hit its lowest level since March 2020 on Tuesday after purchasing managers’ index (PMI) data showed activity in the private sector slowed significantly in August.

The focus is now on Jackson Hole, where Bailey is anticipated to reaffirm the BoE’s commitment to raising interest rates to lower inflation to the target level, despite the central bank’s prediction that the economy would likely enter a recession at the end of this year and not emerge until 2024.

According to Refinitiv data, money markets have fully priced in a 50 basis point increase at the BoE meeting next month, with a small likelihood of a higher 75 basis point increase.

GBP/USD key events today

The United States will release the Core Personal Consumption Expenditure (PCE) Price Index. It excludes food and energy and tracks changes in the cost of goods and services consumers buy for consumption.

There will also be the Economic Symposium, held in Jackson Hole, Wyoming, attended by central bankers, finance ministers, academics, and financial market participants from around the world. Comments and speeches from central bankers and other influential officials can create significant market volatility.

GBP/USD technical price analysis: Bears struggling to break below 1.1761

GBP/USD price analysis

Looking at the 4-hour chart, we see the price consolidating between 1.18515 and 1.17618. The price is riding on the 30-SMA showing neither bears nor bulls are committed. The RSI, which trades below 50, favors bearish momentum.

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Bears might still be stronger than bulls, pushing the price below the support level at 1.17618. On the other hand, if bulls win this battle, we might see the price breaking above the 30-SMA and resistance at 1.18515.

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