BOE Rates & Guidance
GBPUSD is rising today ahead of the keenly awaited August BOE meeting. The BOE is widely expected to cut rates by a further .25% though expectations are split over how dovish the bank’s forward guidance is likely to be. The current upside move in the pair looks to be more a function of USD weakness today than any pre-positioning in GBP. Recent data weakness in the UK highlights the need for fresh action from the BOE though GBP runs the risk of moving higher today if the bank doesn’t follow through with firmly dovish guidance. Given that inflation remain well above target, the case for a more neutral outlook remains strong and any concern over upside inflation will certainly be taken into account by traders, preventing GBP from selling off despite any cut today.
Voting Split on Watch
Alongside that guidance, traders will also be watching movements in the voting split expected to move to 0-8-1 from 0-6-3. If seen, this should encourage the view that further easing is likely. If all members vote in favour of a cut, or any are seen favouring a larger cut, this should put fresh pressure on GBP. However, if the support for a cut undershoots forecasts, this could dilute BOE easing expectations beyond today, keeping GBP underpinned for now while USD continues to weaken.
Technical Views
GBPUSD
The pair is rallying off the 1.3264 level but remains below the broken head and shoulder neckline (1.3427) for now. With the bear trend line from YTD highs coming in around that level too, this will be the key pivot to watch near-term, with bulls looking for a break of that level to target 1.3631 above. To the downside, 1.3138 is the next support to watch should we break current lows.
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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.