The Best Trading Opportunity Today- GBP/USD- November 5, 2015

GBP/USD investors are waiting for what some traders have called the “Trifecta of Bank of England News”. Later today, the central bank is set to release its latest interest rate decision, the latest minutes from the Monetary Policy Committee meeting and its Quarterly Inflation Report. Trading in the Forex pair has been bottled up this week, indicating investor indecision and impending volatility.

Today’s information may shed some light on the timing of the central bank’s interest rate decision. This could move the market before tomorrow’s U.S. Non-Farm Payrolls report, possibly triggering the best trading opportunity for the day.

The GBP/USD could begin early with the release of information at noon London time (7:00 a.m. ET). This will be followed by a news conference with BoE Governor Mark Carney and policymakers at 12:45 p.m. London time.

Today’s report could clarify the timing of the next BoE rate hike. Analysts have several dates for the rate hike in mind, ranging from the very dovish fourth quarter of 2016 to the too hawkish February 2016. Today, the BoE may deliver a moderately hawkish statement, suggesting to investors like the Fed did in its recent statement, that it has been overly concerned about the China’s economic situation while over-reacting to the market volatility.

In its Quarterly Inflation Report, the BoE is expected to cut its growth forecast for grow domestic product to 2.7% for 2015, from 2.8% in August. For 2016, it’s expected to adjust down to 2.6%, from 2.7%.

Its inflation outlook will be watched closely because of its potential effect on near-term price action. If the BoE lowers domestic growth too much and warns of deflationary pressure from the weakness in the Euro Zone, then this would suggest the central bank is worried about lower U.K. consumer inflation. This would be bearish for the GBP/USD.

If the BoE reduces its domestic growth outlook, but downplays the effect of a weaker Euro Zone on the U.K. economy then the British Pound is likely to find support.

Technical Analysis

Technically, looking at the bigger picture on the weekly chart, the key level to watch today is a downtrending angle at 1.5529. This angle has guided the GBP/USD lower since the 1.5929 top in June. Taking out this angle is likely to trigger a breakout to the upside and this would only occur trader believe the BoE believes the economy is strong enough to handle a rate hike sooner than late 2016.

If the BoE comes out dovish then according to the week chart, the next downside targets are 1.5247 and 1.5145.

The daily chart shows the GBP/USD in a downtrend. Since early October, the Forex pair has run into resistance inside a major 50% to 61.8% zone at 1.5461 to 1.5545, forming two main tops at 1.5496 and 1.5507.

The nearest support today is an uptrending angle at 1.5356. A failure to hold this angle could lead to a steep acceleration into 1.5241 to 1.5141.

For daily chart traders, the direction of the market today will be determined by trader reaction to 1.5356. Look for a bullish tone on a sustained move over this level with the first target the 50% level at 1.5461. This will be followed by the tops at 1.5496 and 1.5507.

The weekly resistance at 1.5529 and the Fibonacci level at 1.5545 are the last major upside targets. The latter is the trigger point for a steep rally.

A bearish tone will develop on a sustained move under 1.5356. This is the potential trigger point for a plunge in prices with potential targets at 1.5241 and 1.5141.

Keep in minds that gains and losses could be limited today because of the U.S. Non-Farm Payrolls report on Friday. This could produce a delayed reaction by GBP/USD traders. If this occurs then a bullish jobs report combined with a dovish BoE statement could trigger an acceleration to the downside before the end of trading on Friday.