When is the Bank of England rate decision and how could it affect GBP/USD?
|BoE monetary policy decision – Overview
The Bank of England (BoE) is scheduled to announce its monetary policy decision at 12:00 GMT this Thursday. The UK central bank is widely anticipated to keep the key rate steady at 0.1% and maintain the size of its Asset Purchase Facility at £895 billion. The only thing that the market will care about is the BoE's assessment of the current state of the economy and the recent volatility in bond markets.
As analysts at Capital Economics explain: “Given the improving economic outlook, we doubt the Monetary Policy Committee (MPC) will respond to higher gilt yields by stepping up the pace of its QE purchases. But we think that it will use the policy statement to reiterate its forward guidance that it will keep interest rates unchanged for many years.”
How could it affect GBP/USD?
In the absence of new economic projections or post-meeting press conference, the market is unlikely to react much to the announcement. That said, the BoE could outline the condition for tightening monetary policy, which might infuse some volatility around the British pound and provide a fresh impetus to the GBP/USD pair.
Meanwhile, FXStreet's own analyst, Yohay Elam offered a brief technical outlook and outlined important technical levels to trade the GBP/USD pair: “Pound/dollar has been holding above the 100 Simple Moving Average on the four-hour chart despite the recent decline. Momentum is also to the upside, but only just. For bulls to rage, GBP/USD needs to convincingly surpass the psychological barrier of 1.40 – which has capped the pair twice in the past week. Further above, 1.4050, 1.4075 and 1.4140 are eyed. Support awaits at the daily low of 1.3935, followed by 1.3850 and 1.3810.”
Key Notes
• Bank of England Preview: Green light to gains? Three ways the BOE can boost the pound
• GBP/USD Forecast: Sterling buying opportunity? Fed fallout may make way to BOE boost
• Bank of England Preview: Forecast from 10 major banks
About the BoE interest rate decision
BoE Interest Rate Decision is announced by the Bank of England. If the BoE is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the GBP. Likewise, if the BoE has a dovish view on the UK economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.
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