Sterling Lower Ahead of BoE Super Thursday, Dollar Rallies

What would be seen as a major threat to the Sterling resuming its painful descent would be if the BoE issues a downbeat policy statement, suggesting a downward revision in growth and inflation forecasts which obstruct the need to raise rates.
Lukman Otunuga

The story defining the Pound’s steep depreciation in recent days continues to revolve around Brexit-related uncertainty and a broadly stronger US Dollar.

Much attention will be directed towards the Bank of England policy meeting which should offer fresh insight into the health of the UK economy. It’s widely expected that UK interest rates will probably be left unchanged today, attention will be directed towards the language of the policy statement, inflation forecast and whether there is split in the MPC vote.

The Sterling still appears heavily depressed but could be thrown a lifeline, if the BoE hints a rate hike in 2019 on the condition a soft Brexit or no Brexit at all. Alternatively, buying sentiment towards the Pound is seen taking a major hit if the central bank rules out a hike this year due to the endless uncertainty created by Brexit.

What would be seen as a major threat to the Sterling resuming its painful descent would be if the BoE issues a downbeat policy statement, suggesting a downward revision in growth and inflation forecasts which obstruct the need to raise rates.

Away from the BoE meeting, Theresa May will be flying to Brussels today on a mission to secure further concessions from the EU. With the European Union already making it clear that the withdrawal agreement is “not open for re-negotiations”, it will be interesting to see how her trip plays out. The Pound is seen weakening if she returns back to London empty-handed. However, a rebound could in the cards if expectations start to mount over the government extending Article 50.

Taking a look at the technical picture, the GPUSD is bearish on the daily charts. The current support around 1.2900 could transform into a dynamic resistance that encourages a decline towards 1.2840. If 1.2900 is able to prove reliable support, prices are seen trading back towards 1.3000.

In the currency markets, the Dollar has extended gains against a basket of major currencies this morning. With the currency on a six-day rally streak, bulls have clearly won the battle this week. However, the upside is still likely to face headwinds down the road as markets still expect the Fed to take a pause on rate hikes this year. Focusing on the technical picture, the Dollar Index is seen challenging 96.80 in the near term.

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.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 90% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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

Top Promotions

Top Brokers

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