BOE Likely to Leave Interest Rates Unchanged Despite UK’s Gloomy Economic Outlook

The Bank of England (BOE) looks set to leave interest rates unchanged at 0.75% this week. On Thursday, the BOE is expected to lower its growth and inflation forecast amid Brexit uncertainty.
Lukman Otunuga

On October 28, the EU agreed to give the UK a Brexit extension until January 31, 2020. Prime Minister Boris Johnson called for General Elections on December 12, hoping that the Conservative Party will win majority of the seats in Parliament. If this scenario materializes, it will enable PM Johnson to break the political deadlock on pushing through his Brexit Withdrawal Agreement. The uncertainty regarding Brexit has always been a big issue for the Monetary Policy Committee in terms of growth and inflation forecasts. It’s an uphill task for BOE Governor Mark Carney who is due to leave his post as Governor by January 31 to come up with a decisive policy.

There is continuous pressure on BOE for a rate cut next year. One policymaker from the Monetary Policy Committee, Michael Saunders expressed his support for a rate cute and warned that lower growth is a big concern for the UK’s economy. Keeping all in view, BOE is likely to forecast weak economic growth for 2020 and that will support the argument for a rate cut earlier next year.

GBP enjoyed a bullish October as far as price action is concerned. Investors reacted positively to short-term news. But the GBPUSD rally stalled before reaching 1.30000 due to political and economic concerns. Currently, the price is in wait and see mode before making a decisive move.

On the technical side, GBPUSD on the 4-Hour timeframe has been in an uptrend since October 10. The pair jumped from 1.22000 to reach the highest level of the period under study at 1.29753 on October 31. GBPUSD failed to close above the psychological level of 1.30000, which inspired sellers to take shorts positions. As of writing, the price is hovering around 1.28990 with negative MACD and Momentum below 100 level. Although, price is trading slightly above the 50 periods Simple Moving Average but RSI is still below 50. Bulls need to push the price above 1.30000 level, if price remains below the psychological level of 1.30000, then it will encourage the price to maintain its range towards trending lower.

For more information, please visit: FXTM


Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

 

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US