Traders Capitalizing on Profitable Opportunities

Pound Sterling Official Bank Rate

During the March 2023 meeting, the Bank of England as expected increased its key bank rate by 25bps to 4.25%, reaching 2008-highs in borrowing costs. The move was aimed at bringing inflation back to the 2% target. Although the inflation rate unexpectedly rose from 10.1% to 10.4% last month, it is expected to fall significantly for the rest of the year and to a lower rate than initially anticipated in February. However, policymakers have cautioned that if there are signs of persistent pressure, further tightening may be necessary.

The Bank of England’s decision to increase the interest rate by 25 points can have a significant impact on forex traders. A higher interest rate tends to strengthen the country’s currency, making it more attractive to foreign investors. This is because higher interest rates typically mean higher returns for investors, which can lead to increased demand for that country’s currency. On the other hand, a lower interest rate tends to weaken the country’s currency, making it less attractive to foreign investors. This is because lower interest rates mean lower returns for investors, which can lead to decreased demand for that country’s currency.

GBPUSD Daily Chart

The Pound sterling is currently playing above the 200 and the 50 Day Moving Average which signals a bullish market against the Green Back around 1.2630. Nevertheless, that is also a major resistance level. There could be a slight pullback to the bullish trend line, which is in confluence with the daily demand area, for a rally looking up to the 1.3300 area.

Why Traders and Investors Care.

When the Bank of England increases the interest rate, it can create a positive sentiment towards the British Pound, which can cause it to appreciate against other currencies. This can lead to profitable trading opportunities for forex traders who take advantage of this trend by buying the Pound and selling other currencies.

However, traders should also be aware that the increase in interest rates can lead to increased borrowing costs for businesses and households, which can impact consumer spending and economic growth. This, in turn, can lead to increased volatility in the markets, and traders should exercise caution and implement appropriate risk management strategies.

Now reach out for your ACT Trading platform, mark up your most preferred POUND pairs, FUND your trading account if you are yet to, and position yourself to ride the economic wave of the decade.


Schedule for The GBP Interest Rate release:    Thursday 11th May 2023.  12:30 pm (W.A.T)

Adewuyi Ayodeji James known as A.A.James is a forex analyst and a passionate educator. He has almost a decade of experience in the global financial market and has taught hundreds of students across different countries and growing. He once served as a Business Development Manager, and the Head of Client Relations for Suavally Market Global, a leading forex institute in Africa. During his time at Suavally, He also doubles as the education Champion for one of her Partner brokers M4Market. A.A. James is a Dealer/Educator at ACT Brokers, the only Forex Brokerage firm with a dealing desk in Nigeria. He also teaches at RUBY FX Solutions. A.A. James is the Face and Host of the popular MORNING MARKET; a daily market analysis that holds every morning before the London session opens, with the growing attendance of clients from different brokers from across the globe. He is a Well sought-after retail FOREX Educator, both independent and Trainer for forex Broker(s). A public speaker, Mentor, and Life coach. A Recording Artist, Music, and Art Director with over a decade of active experience.