How can BOE Monetary Policy Statement affect the GBP?

How can BOE Monetary Policy Statement affect the GBP?

2023-06-21 • Updated

In May, against expectations of a slowdown, inflation stubbornly held at 8.7%, creating additional pressure on the Bank of England. This comes just a day before the anticipated 13th consecutive interest rate hike to curb price growth. The headline figure places British inflation at the top among major advanced economies. These numbers aren't exactly comfortable for Prime Minister Rishi Sunak, who aimed to cut inflation by half this year before the 2024 election. Moreover, they could lead to increased mortgage costs for homeowners. Economists suggest that the Monetary Policy Committee may need to substantially raise the Bank Rate in the coming months to address the situation. As a result of the release of these figures, the sterling briefly rose against the U.S. dollar and the euro, while two-year government bond yields reached their highest levels since July 2008. Market expectations have shifted, with a 40% chance that the Bank of England will increase rates by half a percentage point to 5% instead of the previously anticipated quarter-point move. By December, there is a 60% chance of rates reaching 6%. The current figures strengthen the case for the government to stay on its chosen path. However, the opposition party Labour has emphasized its focus on the cost of living if it were to come into power. Core inflation, which excludes volatile items, rose unexpectedly to 7.1%, the highest since March 1992, while services price inflation reached its peak since 1992 at 7.4%. Some relief may come from a slowdown in producer price inflation, although expectations of the BoE raising rates six more times to 6% may be excessive.

GBPUSD - 4 Hours Timeframe

GBPUSDH4-2106.png

GBPUSD was rejected earlier from the weekly pivot, but the price action needs to be more convincing. This may be due to the drop-base-rally demand zone, as the chart above highlights. Also, the moving averages are still clearly aligned in increasing order, often indicating that a bullish trend is in motion. Considering the demand zone, the Fibonacci retracement level, and the 50-period moving average, I will wait for a clear entry based on my convictions (as I’d advise you to do too).

Analyst’s Expectations: 

Direction: Bullish

Target: 1.27204

Invalidation: 1.26307

GBPAUD - Daily Timeframe

 GBPAUDDaily-2106.png

GBPAUD is heading even higher toward the marked supply zone. The bullish price action may have lost momentum, but we will see the continuation of the bullish pressure in a short while. At this time, my sentiment on GBPAUD is bullish, mainly based on the following sentiments;

  • Strong bullish previous day candle
  • Microstructure is already broken in a bullish direction
  • Bullish moving average array

Analyst’s Expectations: 

Direction: Bullish

Target: 1.89740

Invalidation: 1.87380

GBPJPY - 4 Hours Timeframe

 GBPJPYH4-2106.png

GBPJPY has just been pushed back out of the weekly pivot zone by immense selling pressure in the market. This seems to suggest that we should see a fresh wave of sellers entering into the market to push GBPJPY even further down toward the 50-period moving average at the very least.

Analyst’s Expectations: 

Direction: Bearish

Target: 179.307

Invalidation: 181.621

GBPCAD - Daily Timeframe

 GBPCADDaily-2106.png

The current position of GBPCAD, as revealed by the chart above, shows that the price action is currently resting on a rally-base-rally demand zone, with a confluence from the 50-Day moving average. Based on the bullish array of the moving averages, demand zone, and trendline support, we may expect to see even higher prices on the GBPCAD currency chart over the next few days.

Analyst’s Expectations: 

Direction: Bullish

Target: 1.70078

Invalidation: 1.66851

CONCLUSION

The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.

TRY TRADING NOW

You can access more of such trade ideas and prompt market updates on the telegram channel.

Similar

What To Trade In March
What To Trade In March

The month of February saw markets make several instinctive moves as well as create opportunities for proper leveraging of fundamental releases. Despite being a leap-year, there wasn’t any real impact on price delivery in the course of the month. As we await the opportunities that lie ahead in the month of March, here are a few thoughts to consider.

CHF: Key Zone Could Yield Strong Reactions
CHF: Key Zone Could Yield Strong Reactions

USD/CHF saw a rebound after declining for two days straight, climbing towards the important psychological level of 0.8800 during Wednesday's early Asian trading session. There's some pressure on the Swiss Franc (CHF) as traders await the Swiss ZEW Survey – Expectations report scheduled for later today. Moreover, investors are keeping...

USD Expected To Recover Some Strength
USD Expected To Recover Some Strength

In the early hours of Tuesday, the US Dollar faces challenges in maintaining its strength against major currencies, with the US Dollar Index struggling to surpass the 104.00 mark. Investors are eagerly anticipating the release of key economic data, including January Durable Goods Orders and the Conference Board's Consumer Confidence Index for February. Additionally, the economic calendar includes reports...

Latest news

US100: Has the correction ended?
US100: Has the correction ended?

Bullish Scenario: Buys above 17910 with TP:18098.07, TP2:18277, and TP3: 18415 Bearish Scenario: Sells below 17850 with TP1:17730, TP2: 17700

Stocks To Watch For March
Stocks To Watch For March

During his program on CNBC on February 28, Jim Cramer expressed frustration with the impact of earnings reports on market behavior, noting how they often prompt rash decisions by average investors. He criticized the short-term focus and lack of attention to nuance in news coverage of earnings. Cramer cited examples of Home Depot and Lowe's, highlighting how investors reacted hastily to headline news without considering the broader context provided in earnings calls.

Nasdaq, S&P 500 Reach Record Highs
Nasdaq, S&P 500 Reach Record Highs

After creating record highs, Wall Street's main indexes opened on Wednesday and began to edge lower, reflecting cautious sentiment among investors. They're eagerly awaiting crucial inflation data that could impact the U.S. Federal Reserve's interest rate decisions. The upcoming release of the personal consumption expenditures (PCE) price index is expected...

Deposit with your local payment systems

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera