The Bank of England (BOE) will release its monetary policy decision at 1100 hours UTC on Thursday August 1, as well as the Quarterly Inflation Report. We can also expect the minutes of the monetary policy meeting, which showcases the voting pattern of the 9-member committee. Thirty minutes later, we will hear the statement from the Governor of the Bank of England, Mark Carney. So traders have to brace up for a wild ride on the British Pound for an hour or so.
BoE, the British Pound and Brexit
The Cable has had a very bad week, as a result of increased fears of a no-deal Brexit. The BoE is expected to leave the key rate unchanged. However, it may likely assume a neutral-dovish stand in its statement by simply re-echoing what other central banks have been saying lately. A lot of reference will be made to the contents of the inflation report, and any mention of lower inflation risks down the road will allow the BoE room to flirt with the idea of a future rate cut.
Trade Ideas for the GBPUSD
Having dropped nearly 460 pips since the 12th of July, the GBP is in full bearish mode. A dovish view from the BoE will send the GBPUSD down to the lowest levels seen in the last three years, which was the 1.1980 mark seen on October 2, 2016. The GBPUSD is already testing the 1.2100 psychological support area.
On the flip side, a possible recovery as a result of a hawkish tone from the BoE will find resistance at 1.2180, with the swing high of Wednesday located at the 1.2250 area providing the next level of resistance.
The price movement of the GBPUSD will be highly fluid and whipsaws may occur, so any trades based on these three news releases have to be done very carefully.Don’t miss a beat! Follow us on Twitter.
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