BabyPips.com FX-Men Team
BabyPips.com
Few U.K. events can shake up the British pound as much as the MPC rate decision. It can lead to large, wild swings, and it can even affect pound price action over the course of a few days.
That being said, it would be crazy for you to trade the pound tomorrow without a clue as to what the Bank of England (BOE) may say or do. So if you're reading this now, I'd like to congratulate you - you're on the right track!
As it has done so for the past year, the BOE has kept rates unchanged at 0.50%. In fact, the central bank has kept their interest rate at that level for the past three years in hopes of stimulating lending, spending, and growth. As for their asset purchases, no changes are expected from the current 375 billion GBP level as well.
If forecasts turn out to be accurate and the MPC ends up keeping its rates and asset purchases unchanged, then we better prepare for possible trade setups! Luckily, the last two releases provide us with clues on how to trade GBP/USD, one of the most traded pairs at the release of the MPC's decision.
Based on past price reactions, unless the MPC drops bombs in its statement this month, we can expect a muted market reaction on Cable. Still, this doesn't mean that you shouldn't keep close tabs on pound pairs! You never know when a valid trade idea will show up!
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Editors’ Picks
EUR/USD onsolidates around mid-1.1800s as traders keenly await FOMC Minutes
The EUR/USD pair struggles to capitalize on the previous day's goodish rebound from the 1.1800 neighborhood, or a one-and-a-half-week low, and consolidates in a narrow band during the Asian session on Wednesday. Spot prices currently trade just below mid-1.1800s, nearly unchanged for the day.
GBP/USD seems vulnerable near mid-1.3500s; UK CPI/FOMC Minutes awaited
The GBP/USD pair struggles to capitalize on the previous day's late rebound from an over one-week low – levels below the 1.3500 psychological mark – and trades with a negative bias for the third consecutive day on Wednesday. The downside, however, remains cushioned as investors seem reluctant to place aggressive directional bets ahead of the release of the latest UK consumer inflation figures and FOMC Minutes.
USD/JPY is looking for direction around 153.00 with key US data in focus
USD/JPY reversal from 153.70 has been contained above 152.70 on Tuesday. Major currencies are trading within narrow ranges amid thin trading volumes. Investors await the release of the US GDP and PCE Inflation figures to make decisions.
Editors’ Picks
NZD/USD remains heavy near 0.6000 after dovish RBNZ hold
NZD/USD is attacking 0.6000, under heavy selling pressure early Wednesday, responding to the Reserve Bank of New Zealand's (RBNZ) dovish interest rate on hold decision. The RBNZ kept the OCR unchanged at 2.25%. Gowernor Anna Breman reinforced the dovish outlook at her debut press conference.
AUD/USD holds lower ground below 0.7100, awaits FOMC Minutes
AUD/USD holds lower ground below 0.7100 in Wednesday's Asian session. Traders await more cues about the US Fed's rate-cut path before placing fresh directional bets. Hence, the focus will be on the FOMC Minutes, due for release later today, which will drive the US Dollar and the currency pair. In the meantime, the RBA's hawkish stance and a generally positive risk tone might continue to cap the Aussie's downside amid hopes for additional stimulus from China.
Gold bounces back toward $4,900, looks to FOMC Minutes
Gold is attempting a bounce from the $4,850 level, having touched a one-week low on Tuesday. Signs of progress in US–Iran talks dented demand for the traditional safe-haven bullion, weighing on Gold in early trades. However, rising bets for more Fed rate cuts keep the US Dollar bulls on the defensive and act as a tailwind for the non-yielding yellow metal. Traders now seem reluctant ahead of the FOMC Minutes, which would offer cues about the Fed's rate-cut path and provide some meaningful impetus.
Top Crypto Gainers: Jito drops, Morpho holds steady, Convex Finance climbs
Decentralized Finance tokens, including Jito, Morpho, and Convex Finance, rank among the top-performing crypto assets over the last 24 hours. Jito dips on Wednesday after rallying 22% the previous day on the launch of a new mainnet node.
UK jobs market weakens, bolstering rate cut hopes
In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.
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