GBP selling out of the BoE hike? [Video]
That’s what the seasonal bias says from a historical event perspective.
Over the last 23 years, the seasonal pattern around a Bank of England Rate hike looks like this on the GBPUSD pair. On the day before the hike, the GBPUSD pair tends to weakness on the decision. The next couple of days sees further weakness before the GBPUSD picks up higher over the next 7 days.
So, typically, markets know when a rate hike is coming which is why it makes sense to see the GBP selling off on the decision. It’s a clear 'buy the rumour, sell the fact response'. However, what is interesting is the way the GBP has recovered higher after a couple of days lower. Read more...
GBP/USD Forecast: BOE doves could weigh on Pound Sterling
GBP/USD has lost its bullish momentum after having recovered toward 1.2400 on Wednesday. Investors refrain from betting on further Pound Sterling strength ahead of the Bank of England's (BOE) policy announcements and the near-term technical outlook points to a lack of buyer interest.
Despite the heavy selling pressure surrounding the US Dollar late Wednesday, GBP/USD's gains remain limited, especially when compared to EUR/USD.
Although FOMC Chairman Jerome Powell reiterated that additional rate increases will be appropriate following the decision to raise the policy rate by 25 basis points, his acknowledgement of disinflation in goods triggered a US Dollar selloff. Powell also admitted that a faster than expected decline in inflation will be reflected in future policy decisions, keeping hopes high for a policy pivot later in the year. Read more...
GBP/USD outlook: Sterling expects stronger direction signals from BOE
Cable stands at the back foot on Thursday, ahead of BOE policy meeting, though the price action remains within larger 1.2263/1.2247 near-term range and lacking clearer direction.
Technical studies are mixed on daily chart, while warning comes from formation of reversal pattern on weekly chart after the action was repeatedly capped by falling weekly Ichimoku cloud base, though signal still needs more downside action to be verified.
On the other hand, fundamentals are expected to be pound’s main driver today, as markets shift focus on BOE policy meeting, after positive impact from dovish Fed on Wednesday was short-lived. Read more...
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