When is BoE monetary policy 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 this Thursday at 11:00 GMT and is widely expected to keep interest rates on hold at 0.1%. Policymakers Michael Saunders and Dave Ramsden have offered a relatively hawkish tone of late. Hence, the key focus will be on the MPC (Monetary Policy Committee) vote distribution over whether to continue the QE program at the current £895 billion levels. Apart from this, investors will also keep a close eye on the updated economic projections, where upgrades in the near-term GDP growth and inflation forecasts seems inevitable.

As Yohay Elam, Analyst at FXStreet, explains: "There are good reasons for the BOE to convey a cautious message on its August "Super Thursday." The BOE is set to follow from a point of caution, completing its bond-buying scheme and refraining from any tapering. Slowing purchases would signal to markets that rate hikes are coming sooner than later – an outcome it would like to avoid."

How could it affect GBP/USD?

Given the disagreement among MPC members, more dissenters could be seen as a positive trigger for the British pound and allow the GBP/USD pair to build on its recent strong rebound from multi-month lows. That said, worries the Delta variant of the coronavirus and the upcoming end of the employment furlough scheme in September may force the BoE to stick to its dovish tone. This, in turn, suggests that the risk remains tilted to the downside and any immediate positive market reaction is more likely to be short-lived.

Yohay further offered a brief technical outlook and important technical levels to trade the GBP/USD pair: “Momentum on the four-hour chart has turned positive, a bullish sign. Moreover, pound/dollar avoided falling off the 50 Simple Moving Average and trades above the 100 and 200 SMAs – another positive development. Some resistance is at the daily high of 1.3925, followed by 1.2950, which was Wednesday's peak. Further above, 1.3980 was July's high point.”

Key Notes

  •  Bank of England Preview: Five reasons the doves are set to win Super Thursday, GBP/USD may dip

  •  GBP/USD Forecast: Super Thursday for sterling? BOE dissenters are critical, technicals point higher

  •  GBP/USD Price Analysis: Recaptures 1.3900 ahead of Bank of England

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.