The Bank of England (BoE) delivered another interest rate hike and this had an effect on the BTC/GBP and GBP/USD pair. Bitcoin was trading at £23,000 on Thursday, just below the highest level this month, while the GBP/USD pair slipped to a low of 1.2625.
In a statement, the bank hiked interest rates to 5.25%, a 15-year high, in a bid to fight the elevated inflation. Governor Andrew Bailey said: “Inflation is falling and that’s good news. We know that inflation hits the least well-off hardest and we need to make sure that it falls all the way back to the 2% target. That’s why we’ve raised rates to 5.25% today.”
The most recent data showed that the headline consumer inflation dropped from 8.3% in May to 7.9% in June while wage growth jumped by 7.7%. There are signs that the British economy is slowing, with Nationwide showing that the country’s house price index plunged at the fastest pace in over a decade.
Bitcoin typically reacts mildly to actions of central banks like the Bank of England, the European Central Bank, and the Bank of Japan. It also reacted mildly to the Federal Reserve’s last rate hike of the year.
The BTC/GBP pair moved sideways after the BoE’s decision and has formed a bullish flag pattern on the daily chart. It rose to a key resistance level at 24,711 in July, which was the highest point in April, and has risen above the 25-day and 50-day moving averages. Therefore, the BTC to GBP price is likely to have a bullish breakout in the coming weeks.
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