GBP/USD Shows Strength Amidst BoE's Steady Rates

In Monday's European session, the Pound Sterling (GBP) exhibits resilience as the Bank of England (BoE) is poised to maintain interest rates at their current level for an extended period. With persistent price pressures stemming from service inflation, robust labor demand, and strong household spending, BoE policymakers are expected to sustain a hawkish narrative.

Technically, the GBP price remains within a range area, suggesting a potential retracement to the previous 50% Fibonacci level before a potential uptick.

Last week's surprisingly positive UK Retail Sales data signals waning consumer spending impacts from BoE's higher interest rates, hinting at an earlier-than-expected recovery from the UK's technical recession. The recession, initiated in the latter half of 2023, ensued as the BoE upheld higher interest rates to curb inflation, significantly impacting consumer spending and business operations.

The GBP/USD pair sees upward momentum, driven by the Pound Sterling's allure for increased foreign inflows amidst BoE's prolonged hawkish stance. Looking ahead, developments in the Pound Sterling and the US Dollar will be influenced by the preliminary S&P Global Manufacturing PMI for February.

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