The beginning of the month was quite eventful for the Turkish lira. However, this week it started to lose its volatility. What is happening?
Highlights of the Bank of England's meeting
The Bank of England published its latest views on interest rates and monetary policy setting earlier today. Bank rate was held at 0.25%, government bond purchases at £435bn and corporate bond purchases at £10bn. No changes from its previous meeting as you might have noticed. All eyes were on the minutes and the voting. The market participants didn’t expect the split among Monetary Policy Committee members to widen and change from its last 7-1. Three officials from 8 called for a rate increase, warning that inflation could rise more than previously thought and eventually flatten the wallets of the British consumers.
The unexpected shift in the MPC’s voting comes against an uncertain backdrop for the U.K., with real wages falling, consumer spending declining, Brexit negotiations knocking at the door and Prime Minister Theresa May unexpectedly losing her parliamentary majority after Thursday’s general election. The greatest division among the BOE’s policymakers on the interest rate can be explained by the UK economic fundamentals.
In recent weeks, the BOE’s policy had a chance to see further evidence of sharply rising prices, subdued wage growth and a weakening demand from consumers. CPI inflation has been pushed above the bank’s 2 percent target and reached 2.9% in May. The BOE policymakers said it may surge higher above 3%. GDP growth declined markedly in the Q1 mainly due to weaker household spending. So, the rate hike will be needed, anyways, but it will be gradual and limited.
The unexpected split helped GBP to regain its strength. It rose above 1.2770 following the rate announcement.
The BoE’s interest rate announcement is not the single event that may influence the GBP today. Governor Mark Carney will speak at 11 pm MT time at the annual high-profile Mansion House event in London’s financial district.
The market is likely going to continue declining. The main intraday target is the next support at 1.1526 - 1.1508...
Bullish Ichimoku Cloud with horizontal Senkou Span A and B; a golden cross of Tenkan-sen and Kijun-sen with horizontal lines; the market is under strong resistance and prices entered into the channel Tenkan-Kijun.
AUD/CAD falling inside impulse waves 3 and (C) Next sell target - 0…