When is the BOE rate decision and how could it affect GBP/USD?


BOE monetary policy decision - Overview

Markets eagerly await the Bank of England’s (BOE) decision on its monetary policy, which will be announced at 1100GMT, accompanied by the release of the minutes of its policy meeting. The June meeting does not have the post-policy press conference held by Governor Mark Carney.

The BOE is widely expected to keep the benchmark bank rate unchanged at 0.75%, with a 9-0 voting composition in favor of rates on hold. Today’s policy meeting is highly anticipated, as markets can’t wait to understand the UK central bank’s outlook on the interest rates for this year amid increased odds of a no-deal Brexit and improving economic condition.

Markets are pricing in that the BOE will maintain its rate-hike bias, although a dovish surprise cannot be ruled, with the Fed and ECB both switching to the dovish bias amid trade war and global economic slowdown. Carney and his company could very well hint that the next move in the rates could be downward instead of their hawkish tone.   

FXStreet’s Senior Analyst, Joseph Trevisani, writes: “The mildly dovish FOMC statement on Wednesday and recent rate cuts by the Reserve Bank of Australia and the Reserve Bank of New Zealand and the comments by ECB President Mario Draghi that the bank could cut rates if needed have made Mr. Carney’s job all the harder.”

“The voting balance on the MPC will matter as well, if it is not unanimous and one or more members vote for a rate decrease it could galvanize markets to move forcefully towards lower rates,” Joseph adds.

How could it affect GBP/USD?

In the wake of a dovish tilt, i.e., if the BOE joins its global peers’ dovish actions and removes the mention of a rate hike in the statement, the pound could stall its post-FOMC rally and come under heavy selling pressure that could knock-off the GBP/USD pair to 1.2650 levels.

Technically, “The next resistance line is critical – 1.2765 was a double top seen earlier this month. It is followed by the swing high of 1.2815 recorded in May and by the April low of 1.2870. Further above, 1.2900 and 1.2925 await. GBP/USD has some support at 1.2710 which was a swing high last week. It is followed by 1.2660 and 1.2640 which were both stepping stones on the way up. Next, we find 1.2625 which capped cable late last week.,” Yohay Elam, Senior Analyst at FXStreet notes.

Key Notes

BoE Preview: Major Banks are forecasting no change in policy today

UK retail sales arrive at -0.5% m/m in May, meet estimates (GBP keeps highs)

EUR/GBP struggles for direction below 0.8900 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.

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