Yes

>>GBP/USD pauses as Bailey’s stark warning on services inflation unsettles markets

GBP/USD pauses as Bailey’s stark warning on services inflation unsettles markets

crypthub

about 3 hours ago

Market Reaction

After BOE Governor Bailey warned that services inflation remains high, GBP/USD stalled below the 1.2800 level. RSI sits near 52, support at 1.2750 and 1.2680, resistance 1.2850‑1.2880, while the 50‑day MA is 1.2720. Volume rose 34% and implied volatility jumped 18%, with a surge in put hedging.

Services Inflation Dynamics

Services inflation, driven by restaurants, healthcare and education, stays around 6.2% YoY versus 2.1% goods inflation, far above the BOE’s comfort zone. Wage growth in these sectors outpaces productivity, making price pressures sticky. The UK’s rate exceeds the Eurozone (4.0%) and US (3.9%) measures, highlighting a structural gap.

Policy Implications

Bailey’s comment cut the odds of a May 2025 rate cut from 68% to 42% and lifted the projected terminal rate by 25 basis points. The BOE now stresses data‑dependency, especially on services metrics, to avoid premature easing. Traders will watch the 1.2720 moving average and upcoming CPI data for the pound’s direction.