Sterling Lower Ahead of BoE Super Thursday, Dollar RalliesWhat 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.
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.
Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
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.