The GBPUSD pair, also called the cable, was trading 0.20% stronger on Thursday and was hovering around 1.3570 during the London session, with volatility expected to be very high later in the day.
The Bank of England is expected to leave rates unchanged at today’s meeting, albeit just a month ago, investors forecast the central bank to hike rates in May. Since then, inflation slowed as well as other data, which led to the collapse of the pound. The market still expects one rate hike later this year. The following statement will be very closely watched, whether the BoE sounds dovish or neutral.
Additionally, the BoE quarterly report is due as well and could contain more clues how the Bank of England plans to handle the slowing inflation, which is still above the 2% target, combined with the deteriorating economic activity in the United Kingdom.
Cable is trying to defend the 200 day moving average around 1.3540, but so far, all the bounces from this level have been sold. However, any dips below were bought and the BoE will most likely set the direction for next days.
The key support is at 1.3480, if broken, the bearish trend would be confirmed, target the 1.34 level. On the other hand, should the 1.36 resistance fall, bulls could push the GBPUSD pair toward 1.3720. In all cases we strongly recommend to have rigorous money and risk management.
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