Live Coverage: Bank of England may slam Sterling with a cut for the wrong reasons

Yohay Elam FXStreet

The Bank of England (BoE) is set to cut interest rates by 25bps, and traders will ask why? Lower inflation is a blessing, but if officials worry about growth, the reaction in the Pound will likely be different. Live coverage.

Join FXStreet Premium to ask our analysts questions live, leverage actionable analysis and get Gold and signal alerts.

Bank of England Super Thursday is a multi-faceted event

The "Old Lady" as the Boe is also known, is set to reduce borrowing costs by 25bps to 4.50%. That is fully priced in.

Members of the Monetary Policy Committee (MPC) are projected to support the cut by a majority of seven vs. two who would back leaving rates unchanged. A larger majority would weaken the Pound, while a smaller one would support the Sterling.

Then, the focus shifts to what makes this Thursday "super." At this event, the BoE also publishes its quarterly Monetary Policy Report (MPR), which consists of critical forecasts. There is a fear that the bank would slash the growth outlook and lift inflation projections. Such a scenario of outright stagflation would hurt the Pound even if the BoE would refrain from further cuts in the near future.

A more optimistic scenario would include little changes to forecasts and confidence on the British economy.

Last but not least, BoE Governor Andrew Bailey faces the press, where reporters might badger him about US tariffs. He will try to avoid politics, but hints of how the BoE would respond to economic shocks coming from America might be useful if Trump focused his ire on the UK. He currently spares Britain, thanks to a lack of a large trade deficit.

All in all, it's a lively event, and we will cover it live for you.

Live financial market coverage

FXStreet covers major economic releases in a live blog format, to provide readers an instant verdict of the data, rapid analysis of key assets, and, for Premium members, the ability to ask our experts questions in real time.

FXStreet Premium

FXStreet Premium provides subscribers access to analysts, exclusive actionable analysis, signals, Ed Ponsi's webinars, trade plans, and a bullish/bearish indicator for Gold on critical events. Join FXStreet Premium here.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

GBP/USD holds above 1.3350 with the 200-day SMA capping gains

The British Pound appreciates against the US Dollar on Tuesday to trim previous losses and return to the 1.3375 area, aiming to retest resistance at the key 200-day Simple Moving Average. This is a popular indicator, which lies a few pips below 1.3400 and has been capping Pound’s recovery over the last two weeks.

EUR/USD consolidates gains above 1.1400

Following an earlier move to multi-day peaks past 1.1460, EUR/USD has now slipped back toward the low 1.1400s as the NA session draws to a close on Tuesday. Declining bets for potential Fed tightening later in the year coupled with poor US CPI data hurt the US Dollar, lending fresh legs to the pair and the broader risk-linked universe. Moving forward, the release of US PPI and Chair Warsh’s second testumony should keep investors entertained on Wednesday.

Gold battles to recover the $4,100 mark

Gold reverses the recent weakness and reclaims the area beyond the key $4,000 mark per troy ounce on Tuesday. The precious metal’s recovery picks up pace and approaches the $4,100 region following the Greenback’s decline and comments from the Fed’s Warsh.

Bitcoin, crypto market post gains following weaker US inflation reading

The crypto market posted gains on Tuesday following the release of the US Consumer Price Index (CPI) report for June, which showed that inflation cooled below market expectations. According to the US Bureau of Labor Statistics, annual inflation slowed to 3.5% in June from 4.2% in May, marking its first decline in five months and coming in below the consensus forecast of 3.8%.

Fed Chair Warsh reaffirms they will deliver price stability

While testifying on the Semiannual Monetary Policy Report before the US House Financial Services Committee, Fed Chairman Kevin Warsh reiterated that the Fed is making a commitment on price stability and the goal of 2% inflation.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.