The most impactful releases of this week will fill the market with volatility and sharp movements. Be ready to take action!
Bank of England Statement: What to Expect
What will happen?
The Bank of England will publish its Monetary Policy Report and Summary, Official Bank Rate, and its votes on May 5 at 14:00 MT. The report contains the inflation forecast and economic growth over the next two years. The head of the BoE will also hold a press conference to discuss the report’s contents after its release. It provides valuable insights into the bank’s views on economic conditions and inflation, which are key factors that will determine the future of monetary policy and influence interest rate decisions. This monthly releases has a direct impact on GBP.
Possible GBP movements
Lately, the Bank of England said it would consider selling the securities back to the market once the bank rate hits 1%. Now the interest rate is 0.75%. However, poor market liquidity and heightened volatility suggest that the committee is likely to hold off for now and wait for conditions to improve before jumping into active selling.
The geopolitical crisis impacts the UK immensely with high commodities prices and the consumer price inflation rate of 7%, the highest of the last 30 years. It increased the pressure on Prime Minister Boris Johnson and his finance minister, Rishi Sunak, to lower the cost-of-living level.
The previous release was on March 17. The BoE policy was rather dovish. Right after the release, the GBPUSD fell 1150 points.
How to trade on the UK Official Bank Rate release?
The higher the “Actual” rate relative to the “Forecast”, the better for the currency.
Financial analytics suppose that the Bank of England will raise interest rates to 1% from 0.75% on May 5 and then bring them to 2%-2.25% by the end of 2022. Although, many economists expect the rate to be less aggressive.
Samuel Tombs, chief economist at Pantheon Macroeconomics in the UK, forecasts inflation to reach 8.8% in April after utility bills skyrocket but then fall below the Bank of England's target of 2% in the second half of next year.
Check the Economic Calendar
Instruments to trade: GBPUSD, EURGBP, GBPCAD, GBPJPY.
Oil prices are rising and Russia banned the export of its petrol. What's happening in the markets?
Today's main event for the markets is the FOMC Interest Rate Decision, where the US regulator is widely expected to keep the interest rate at the same level of 5.5%.
In today's market insights, we delve into Citibank's oil price predictions, the evolving competition between Huawei and Apple, the Saudi Arabia-Tesla partnership, and the upcoming rate decisions from the world's major central banks.