GBP/USD Price Forecast: Keeps bullish vibe, first upside target emerges above 1.3550
The GBP/USD pair attracts some sellers to around 1.3480 during the Asian trading hours on Wednesday. The Greenback strengthens against the Pound Sterling (GBP) on the economic signs in the United States (US).
Data released by the Conference Board on Tuesday showed that the US Consumer Confidence Index rose to 98.0 in May from 86.0 (revised from 85.7). The Minutes of the Federal Open Market Committee (FOMC) will take center stage later on Wednesday.
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” a steady inflation rate of around 2%.
Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit.
This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing.
In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Source: Fxstreet
