GBP/USD: Pessimism from the BoE to send the pound down


The Brexit bonanza has proved short-lived – pound bulls prematurely celebrated PM Boris Johnson's climbdown before the Federal Reserve sent the safe-haven dollar higher. Now it is the Bank of England's turn to move cable – and potentially tilt it lower, FXStreet’s analyst Yohay Elam reports.

See – Bank of England Preview: Eight major banks expectations

Key quotes

“PM Johnson agreed to compromise with the ‘rebels’ in his Conservative Party by agreeing to more robust parliament oversight over the Internal Markets bill. Will Brussels accept the modified version of the bill? The block previously laid down an ultimatum to the UK – rescind the legislation by the end of the month or face sanctions.” 

“While the world's most powerful central bank raised 2020 growth forecasts, it downgraded the one for 2021. More importantly, Federal Reserve Chairman Jerome Powell said the current level of bond-buying is appropriate, disappointing investors. He also indicated fiscal stimulus would be useful. That may come earlier than expected following weak retail sales. Weekly jobless claims figures are eyed later in the day.”

“Andrew Bailey, Governor of the Bank of England, is projected to leave the interest rate unchanged at 0.1% and the Quantitative Easing program at £745 billion. Markets will be watching the bank's fresh assessment of the economy moving forward. On the one hand, the recovery beat estimates and unemployment remains low at 4.1% in July. On the other hand, uncertainty about Brexit, the furlough scheme, and the virus – as Northeastern England is hit by new restrictions – may weigh on the outlook.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD holds gains above 1.1850 amid tepid market mood

EUR/USD is trading above 1.1850, holding onto recent gains The uptrend, however, at risk as coronavirus cases rise across the Eurozone. New lockdown restrictions may force the ECB to adopt a stronger dovish stance. Focus shifts to Powell's speech, EZ Preliminary PMIs. 

EUR/USD News

GBP/USD hovers around 1.2950 amid likely virus curbs

GBP/USD stays well bid near  mid-1.2900s following three successive failures to cross 1.3000 during last week. UK’s health authorities mull lockdown restrictions. Chancellor Sunak may extend business support loans. Fedspeak eyed amid a light calendar. 

GBP/USD News

USD/JPY drops to over six-month lows, fast approaching 104.00 mark

USD/JPY witnessed some follow-through selling for the sixth consecutive session on Monday. The USD was being pressured by fading hopes of another round of the fiscal stimulus measures. Resurgent COVID-19 cases benefitted the safe-haven JPY and contributed to the offered tone.

USD/JPY News

Gold jumps back on the bids above $1950 amid risk-aversion

Gold is back on the bids above $1950 amid growing coronavirus fears induced risk aversion. Gold's multi-week consolidation in a narrowing price range could end with a bullish breakout, as a widely-tracked daily chart indicator is about to turn bullish. 

Gold News

WTI buyers attack $41.00 amid US-Iran tension, escalating virus woes

WTI remains heavy below 50-day SMA, drops from $41.18 to begin the week. The energy benchmark keeps trailing 50-day SMA for over two weeks while taking clues from the US-Iran tussle and the coronavirus (COVID-19) headlines. Hopes of further stimulus, China’s optimism favor energy bulls.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures