BOE In Focus
Following the Fed hiking by .75% last night, over the initially pegged .5%, and the SNB making the surprise announcement of a .5% rate hike this morning, focus now turns to the BOE. On the back of May inflation rising to record levels, and general backdrop of aggressive central bank tightening, there are clear upside risks into today’s meeting. While consensus forecasts are for a .25% hike, the stage is clearly set for a larger hike which might help propel GBP off the lows plumbed this week in response to a string of worse-than-expected data.
Away from the hike itself, however, the bigger focus is likely to be on the bank’s forward guidance and assessment given the recessionary fears gripping the UK. A further negative GDP print and a slew of other key readings missing forecasts (employment, production etc) is raising fears of a big slow down in the UK, which the BOE itself warned was likely coming. Traders will now be looking to see how the bank’s view has developed. If the BOE is seen sounding even more pessimistic, this will likely curtail any upside from today’s hike.
Technical Views
GBPUSD
GBPUSD has been grinding lower within a well-defined bear channel this year. With price having recently broken down to fresh lows yet again, the near-term bias remains firmly bearish. Price is currently sitting on support at the 1.2022 level. If today’s BOE meeting send GBP lower, bears can look for a break of that level targeting a move down to 1.1474 next, in line with bearish RSI and MACD readings and the majority long position held by the retail market.
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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.