Following two consecutive emergency meetings, the Bank of England (BOE) is up for contributing to the “Super Thursday” at 06:00 AM GMT, with a surprise change in time. The routine Interest Rate Decision will be accompanied by the release of the minutes of its policy meeting and the Quarterly Inflation Report (QIR). Following these catalysts, the market sees the post-policy press conference held by Governor Andrew Bailey, at 09:00 GMT.
Looking backward, the British central bank dragged key interest rate to 0.10% and added £200 billion in its Quantitative Easing (QE) program, currently at £645 billion, during late-March and stood silent since then.
Although the earlier actions by the “Old lady” curbs expectations of any more moves during today’s monetary policy meeting, Andrew Bailey and the company have been fierce during their initial appearances in March, which in turn gives the room for surprises.
Even so, UOB’s Economist Lee Sue Ann cites the room for further easing:
The BoE had cut rates by 65 bps to 0.10%, which is its view of the lower bound, and increased its asset purchase target to GBP645bn. Estimates suggest that the BoE still has plenty of space to expand its current QE program. There are GBP390bn of gilts currently available to buy and that is before the enormous issuance due this year. As such, the sluggish economic backdrop would put the prospect of more BoE easing on the table.
How could it affect GBP/USD?
While more is always on the table for all the central banks amid the current coronavirus (COVID-19) crisis, the BOE is more likely to push the brakes after the latest drastic moves. However, any more rate cuts (highly unlikely) or further addition to the QE can weigh n the GBP/USD pair. Further, the quarterly economic projections and Governor Bailey’s press conference will be watched closely for near-term direction, which isn’t expected to provide any upbeat signs considering the virus outbreak and its economic impact on the UK. It's worth mentioning that the Office for Budget Responsibility (OBR) cited fears of 35% contraction in Q2 2020 GDP.
The cable currently struggles to overcome the early-Asian session drop to the two-week low while taking rounds to 1.2325, down 0.18% on a day. However, the cautious trading ahead of the BOE fails to defy the pair’s sustained trading below 50% Fibonacci retracement of its March month downside. As a result, sellers can keep targeting April 21 low around 1.2250/45 ahead of the previous month's bottom near 1.2165 during the downbeat outcome. On the contrary, if at all BOE surprises the markets, a confluence of 21 and 10-day SMA around 1.2440 can limit the pair’s recoveries beyond the support-turned-resistance line of 1.2345.
Key Notes
GBP/USD Price Analysis: Refreshes two-week low ahead of BOE
GBP/USD Forecast: Pressure mounts ahead of BOE
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.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
USD/JPY holds near 155.50 after Tokyo CPI inflation eases more than expected
USD/JPY is trading tightly just below the 156.00 handle, hugging multi-year highs as the Yen continues to deflate. The pair is trading into 30-plus year highs, and bullish momentum is targeting all-time record bids beyond 160.00, a price level the pair hasn’t reached since 1990.
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
Ethereum could remain inside key range as Consensys sues SEC over ETH security status
Ethereum appears to have returned to its consolidating move on Thursday, canceling rally expectations. This comes after Consensys filed a lawsuit against the US SEC and insider sources informing Reuters of the unlikelihood of a spot ETH ETF approval in May.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.