GBPUSD, H1
Sterling has taken a rotation lower into the BoE announcement, with the currency racking up losses of over 0.4% against the Dollar and Euro, and most other peers. Cable has printed a fresh three-day low below 1.2480 while EURGBP has lifted into three-day high terrain above 0.9000. The UK currency had been bid earlier in the week after a top-level videoconference on EU-UK trade injected fresh intensity into the negotiations, though market participants are now turning their attention to the BoE policy, with the Monetary Policy Committee announcing later today following a two-day meeting. The BoE’s policy review comes with UK May CPI having ebbed to a rate of just 0.5% y/y, a four-year low, and extending a disinflation trend after recording 0.8% y/y in April. The data will have been well anticipated by policymakers, which have already implemented crisis response measures as a consequence of the coronavirus pandemic.
The central bank is likely to keep its powder dry and leave policy settings unchanged at its announcement, but will accompany this with unambiguously dovish guidance, including, it is expected, keeping open the possibility of negative interest rates — hence the weakness in Sterling pre-announcement. The possibility of going negative with interest rates is pressuring the Pound, along with the backdrop of flagging global stock markets, to which the UK currency has established a strong positive correlation with during the pandemic era so far.
Announcement is imminent, at 11:00 GMT.
Click here to access the HotForex Economic Calendar
Stuart Cowell
Head Market Analyst
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
