BOE On Watch
The British Pound is on watch today as traders prepare for the latest Bank of England rate decision and monetary policy meeting. The market is widely expecting the BOE to cut rates by a further .25% to 4.5%. Alongside the cut, traders are looking for the bank to revise its growth forecasts lower and will be paying particular attention to how the bank references the expected impact from Labour tax hikes as well as the risks around Trump’s trade threat to the UK.
Inflation Focus
Additionally, traders will be looking at the BOE’s update inflation forecasts for a guide as to how the bank is likely to act on rates over the remainder of the year. The recent cooling in services inflation is seen as a key dovish catalyst for the BOE with rates expected to come down further this year if inflation continues to cool in coming months.
GBP Risks
In terms of the details of the meeting, along with the guidance offered by the bank traders will be watching the voting split which is expected to shift to 8-1 in favour of a cut from 6-3 prior. If all 9 members are seen backing a cut, this will be a firm dovish signal for the markets with GBP likely to trade firmly lower as a result. Indeed, GBP is at risk of a fresh move lower today if we see a cut from the bank, a dovish shift in voting and clear dovish guidance from the bank, along with downward revisions to growth and inflation forecasts. GBPUSD is particularly vulnerable given the less dovish Fed outlook and the upside USD risks linked to Trump’s trade tariffs.
Technical Views
GBPUSD
The breakout above the bear channel from 2024 highs has stalled for now into the 1.2677 level. Plenty more res overhead with the retest of the broken bull trend line and the 1.2685 structural level. Bulls need to see a break of that region to alleviate risk of a fresh downturn. Below market, 1.2337 is next support to watch along with the retest of the broken bear channel.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.