U.K. BOE Interest Rate Decision
Today BOE has scheduled to release Interest Rate Decision and Monetary Policy Summary at 1200 GMT/1730 IST. Short term interest rates are the paramount factor in currency valuation – traders look at most other indicators merely to predict how rates will change in the future. Today MPC members will vote on where to set the rate. MPC members vote on the total amount of money to create for the program. The individual votes are published 2 weeks later in the MPC Meeting Minutes. In addition, Monetary Policy Summary is among the primary tools the MPC uses to communicate with investors about monetary policy. It contains the outcome of their vote on interest rates and other policy measures, along with commentary about the economic conditions that influenced their votes. Most importantly, it discusses the economic outlook and offers clues on the outcome of future votes.
In today’s BOE’s meet, markets expect key interest rate will remain unchanged but any hint regarding timing of the rate hike would be advantage to predict the economic recovery. Currently U.K. is focusing on vaccine roll out efficiently. Most probably all adults in U.K. are likely to receive a first vaccine dose by early June. Just Like U.S. yield, 10 – year U.K. gilts are also rising sharply and pushing the sterling higher. Chances are high that U.K. policymakers may open the option of negative interest rate on table and introduce additional guidance to get the economy back on the track.
Let’s see how Sterling has reacted during the previous data release:
GBP/USD: The pound exhibits range bound movement ahead of BoE’s Interest Rate decision and remains well supported below $1.40 mark. The pair made intraday high at $1.4001 and low at $1.3935 mark. Triple EMA on a day chart and H1 chart confirm bullish trend for the time being. A sustained close above $1.3992 on H1 chart requires for the upside rally. On the other hand, consistent close below $1.3940 on H1 will test further supports too.
Key Resistances: $.4001, $1.4032, $1.4077, $1.4112, $1.4150
Key Supports: $1.3940, $1.3885, $1.3862, $1.3816, $1.3750
Take a look and do trade wisely!