August 4, 2021 14:05:26
The Bank of England meeting is not expected to bring any major changes in policy. This also means a hawkish turn from rate-setters may be avoided for now as the Covid-19 uncertainty lingers. However, some BoE hawks have recently been proposing an early end to QE which is currently scheduled to run until year-end. So, the focus may be on how many voters want an early end to QE. Some market watchers are forecasting a 6-2 vote in favour of QE purchases continuing and some form of policy sequencing review to explain when and how tightening may start.
The bar for a hawkish surprise appears quite high, but the bank is expected to offer some fairly upbeat forecasts with increases in its inflation projections. Interestingly, bond markets are fearing a more hawkish shift with the continued flattening of the yield curve.
GBP/USD bull breakout?
The pound is trying to push higher out of a continuation pattern. This narrow channel has the high 1.38s acting as support and the top of the potential flag pattern at 1.3981/83 as resistance. A move above here would mean the 50-day and 100-day SMAs at 1.3933 and 1.3923 should be decent support.
The close is all-important here as cable hasn’t closed above these two indicators since mid-May. Bulls will target 1.40 and above on a bullish MPC while first support sits at 1.3873/75.
Although Moneta Markets aims to ensure that the information/material is accurate, it cannot be held responsible for any omissions/miscalculations or mistakes as it does not warrant the accuracy of such material. Any material and/or content provided herein is intended for educational purposes only and does not constitute investment advice on how clients should trade as it does not take into consideration your personal objectives, financial circumstances or needs. Please seek independent advice before making any trading decisions. Reliance on such material is solely at your own risk and Moneta Markets cannot be held responsible for any losses resulting directly or indirectly from such reliance. Any reference to figures/statistics or numbers refers to the group of companies of Moneta Markets. Please refer to the legeal documents should you require more information.
