GBP/USD Holds Above Mid-1.2700s, Lacks Intraday Trend Before BoE Decision

During Thursday’s Asian session, the GBP/USD pair is confined to a tight range above the mid-1.2700s as traders anticipate the Bank of England (BoE) policy decision. The pair’s movement remains relatively stagnant on the day, with market participants holding off on further trades until the central bank’s verdict is revealed.

Expectations for a more assertive policy tightening by the BoE have risen following the release of UK consumer inflation data exceeding forecasts, maintaining a steady 8.7% YoY rate in May. Core CPI also surged to its highest level since March 1992. Last week’s encouraging UK employment data, which showed robust wage growth, further stoked prospects of higher interest rates. 

Consequently, the yield on two-year UK government bonds reached its peak since 2008, bolstering the GBP/USD pair’s positive momentum. Meanwhile, the subdued price action of the US Dollar lends support to the pair.