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 trims losses, flirts with the 1.1850 zone
EUR/USD is back on the back foot on Wednesday, slipping below the 1.1850 area as the US Dollar picks up some modest traction. The move comes as traders position ahead of a busy run of US data and the release of the FOMC Minutes. Adding to the pullback are reports that the ECB’s Lagarde may step down before completing her term.
GBP/USD flirts with daily highs near 1.3580
GBP/USD manages to set aside two consecutive daily declines and trades with slight gains in the 1.3580 zone on Wednesday. Cable’s uptick comes despite acceptable gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.
USD/JPY price continues to hold key support level around 152.00
The USD/JPY pair trades 0.27% higher to near 153.70 during the European trading session on Wednesday. The pair gains as the Japanese Yen underperforms its major peers on expectations that Japan’s Prime Minister Sanae Takaichi will announce big spending plans in the fiscal budget to boost economic growth. Theoretically, a higher fiscal deficit weakens the appeal of the domestic currency.
Editors’ Picks
EUR/USD trims losses, flirts with the 1.1850 zone
EUR/USD is back on the back foot on Wednesday, slipping below the 1.1850 area as the US Dollar picks up some modest traction. The move comes as traders position ahead of a busy run of US data and the release of the FOMC Minutes. Adding to the pullback are reports that the ECB’s Lagarde may step down before completing her term.
GBP/USD flirts with daily highs near 1.3580
GBP/USD manages to set aside two consecutive daily declines and trades with slight gains in the 1.3580 zone on Wednesday. Cable’s uptick comes despite acceptable gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.
Gold regains some shine, retargets $5,000 ahead of FOMC Minutes
Gold gathers fresh upside traction on Wednesday, leaving part of the weakness seen at the beginning of the week and refocusing its attention to the key $5,000 mark per troy ounce, all ahead of the release of the FOMC Minutes and despite the modest uptick in the US Dollar.
Pi Network rally defies market pressure ahead of its first anniversary
Pi Network is trading above $0.1900 at press time on Wednesday, extending the weekly gains by nearly 8% so far. The steady recovery is supported by a short-term pause in mainnet migration, which reduces pressure on the PI token supply for Centralized Exchanges. The technical outlook focuses on the $0.1919 resistance as bullish momentum increases.
Mixed UK inflation data no gamechanger for the Bank of England
Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.
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