GBP/USD: analysts expect the Bank of England to raise the interest rate

trades with multidirectional dynamics, trying to turn downward after a fairly active growth last week, which resulted in updating the record highs of April 22. The instrument is testing the 1.2800 mark for a downside breakdown, but investors are in no hurry to open new positions, preferring to wait for the emergence of drivers for the movement.

On Wednesday, June 21, the U.K. will release May consumer price index statistics, which may slow from 8.7% to 8.5% in annual terms and from 1.2% to 0.4% in monthly terms. The core inflation rate is expected to remain unchanged at 6.8%, while the core producer price index may adjust from 6.0% to 4.7%.

In addition, Thursday will see a meeting of the Bank of England, which, as we recall, is preparing for another 25 basis points increase to 4.75%. It is expected that seven members of the regulator's board will vote in favor of a decision to tighten monetary policy, while only two are expected to vote in favor of keeping the value at current levels.

Analysts of Bloomberg agency believe that prolonged adherence to the hawkish course, as well as the increase in the cost of borrowing by the British financial authorities to 6.00% may lead to negative consequences for the national economy. In particular, households are once again under pressure due to a sharp rise in the cost of mortgage loans, while the rapid growth of corporate insolvency indicates that especially small market players, which account for the bulk of employment, will optimize costs by laying off employees.

Experts assume that Bank of England officials will continue to adjust the interest rate further - to 5.75% or possibly even 6.00% next year. If the forecast is realized, mortgage prices will rise by an average of 250.0 pounds - the maximum for 22 years.

During the week in the US, investors will be watching the data on the number of jobless claims, as well as the speech of the head of the US Federal Reserve Jerome Powell in Congress, where, among other things, the issues of further tightening of monetary policy may be touched upon.

The Bollinger Bands on the daily chart are showing strong growth: the price range is expanding, but it is not keeping up with the surge of "bullish" activity at the moment. MACD is growing, keeping a strong buy signal (the histogram is located above the signal line). Stochastic, having reached its maximum values, turned horizontal, indicating the risks of overbought British currency in the ultra-short-term perspective.

Short positions on GBP/USD can be opened after a confident breakdown of 1.2750 downwards with the target of 1.2600. Stop loss - 1.2830. Implementation period: 2-3 days.

A rebound from 1.2800 as a support with the subsequent breakdown of 1.2900 upwards may be a signal to open new long positions with the target of 1.3100. Stop-loss - 1.2800.