U.K. BOE Interest Rate Decision
The key event for the day will be BOE’s Interest Rate Decision. The rate decision is usually priced in the market, so it tends to be overshadowed by the Monetary Policy Summary, which is focused on the future. 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. 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.
Just like other Reserve Banks, BOE is also widely expected to leave the policy rate unchanged. BOE might give hint on tapering but most probably BOE is likely to upgrade the economic forecasts. In U.K., half of the population has taken at least on doze of vaccination and new daily virus cases have also fallen drastically. The best thing about U.K. is that the country is ready to reopen fully by ending all lockdown restrictions on June 21st. When the country fully reopens, we will see an even bigger boost to economic growth.
Let’s see how GBP has reacted during the previous data release:
GBP/USD: The Sterling remains volatile ahead U.K. BOE’s Official Cash Rate Decision. The pair made intraday high at $1.3913 and low at $1.3885 mark. A day chart as well as H1 chart with triple EMA confirms the uptrend for the time being only. A sustained close above $1.3911 requires for the upside rally. Alternatively, a consistent close below $1.3882 will check further key supports.
Key Resistances: $1.3927, $1.3954, $1.3978, $1.4001, $1.4022
Key Supports: $1.3882, $1.3850, $1.3802, $1.3776, $1.3740
Take a look and do trade wisely!