Get started

BOE

Pound in holding pattern ahead of Fed, BOEIt has been a quiet week for the British pound, but that could change in a hurry, with the Fed announcing its rate decision later today, followed by the Bank of England on Thursday. It's a virtual guarantee that the Federal Reserve will raise rates at today's meeting by 25 basis points. This would bring the benchmark rate to 4.75%. The Fed has had some success bringing down inflation, which fell to 6.5% in December. Inflation has de-accelerated for six straight months, which certainly sounds like it has peaked. Still, the Fed won't be using the "P" word anytime soon for fear of an excessive reaction from the markets. The markets are counting on a dovish pivot from the Fed, given the increasing signs that the US economy is slowing down. Will the Fed stick to its hawkish stance at the meeting, or will it present a more dovish stance? If the Fed signals that there are no plans to pivot, the US dollar should gain ground. Conversely, any hints about an easing in policy, such as a cut in rates later this year, would raise risk appetite and weigh on the dollar. The Bank of England follows the Fed with its own rate announcement on Thursday. The central bank is widely expected to raise rates by 50 basis points, which would bring the cash rate to 4.0% and would mark a 10th straight rate increase. Given the weak economy and sharp drop in housing prices, there is an outside chance of a modest 25-basis point hike. Despite the steep tightening cycle, inflation is running at a sky-high 10.5%, so the BoE is in no position to talk about a pause in rate hikes without inflation heading lower. Wage growth is becoming a major concern for the BoE, and today's massive strike by public servants for better pay won't help matters. Wages haven't kept up with soaring inflation, which is why we're seeing disgruntled workers go on strike, but wage growth is close to a record pace and is a major factor behind inflation which is still in double digits. GBP/USD is putting pressure on support at 1.2289. Next, there is support at 1.2203 There is resistance at 1.2369 and 1.2474
by OANDA
Pound jumps as inflation easesThe British pound is in full flight upwards on Wednesday. In the North American session, GBP/USD is trading at 1.2393, up 0.86%. UK inflation eased for a second straight month in December. Headline CPI dipped to 10.5%, down from 10.7% in November and just below the forecast of 10.6%. Core CPI, however, did not show an improvement as it remained unchanged at 6.3%. The downtrend is welcome news, but inflation still remains stubbornly high after hitting 11.1% in October, a 41-year high. The Bank of England has raised rates to 3.50% but clearly, more work needs to be done. The labour market remains robust, with wage growth climbing to 6.4% in December, up from 6.2% in November and brushing past the forecast of 6.1%. This is well below inflation levels, much to the chagrin of workers, but it is much too high for the BoE, which is focussed on curbing inflation. The BoE meets next on February 2nd and the markets have priced in a second-straight 50-bp increase. The BoE will also release updated economic forecasts, which could play a key role in the central bank's rate policy over the next several months. US consumers cut back on spending in December for a second consecutive month. Retail sales fell 1.1%, driven lower by a decline in vehicle sales due to rising interest rates for vehicle loans, as well as lower gas prices. This was lower than the November reading of -1.0% and the consensus of -0.8%. Core retail sales also declined by -1.1%, compared to -0.6% in November and the forecast of -0.8%. The disappointing numbers have sent the US dollar lower against the majors, as speculation rises that the Fed may have to ease up on the pace of rate hikes due to a weakening economy. GBP/USD has pushed above resistance at 1.2292 and 1.2352. The next resistance line is at 1.2455 There is support at 1.2189 and 1.2129
by OANDA
Cable Pushing Higher After UK CPI Data Cable is back in an uptrend after a capitulation back in September, with the current price making some extended move up after breaking above 1.2 psychological level. We see Cable unfolding a five-wave bullish impulse from the lows, with more upside coming after recent pullback from the highs that unfolded as a correction. Ideally, that was subwave four that can not send the price back into an uptrend after a break above 1.2150 resistance. Ideally thats now the beginning of a new fifth wave higher. Some spectators are also betting on GBP as they believe BoE should be more hawkish with CPI at 10.5%.
by ew-forecast
GBPCHF:Good opportunity on Policy DivergenceSwitzerland National Bank officially announced the intervention in the FX market to stop the Swiss Franc depreciation, which confirms a regime change for the SNB. and their Hawkish monetary policy will strengthen the CHF and aim for a lower inflation, meanwhile the Bank of England hiked the rates slowly and with hesitations despite a very high inflation which should contribute to a strong CHF against GBP. Technically we noticed a breakout of the Daily trend, we will look into selling the retrace of the breakout around the monthly zone of 1.129, with a SL above previous highs as in the swing trades the movements are more violent so a proper risk management should be considered. Remember that whatever is your reasoning for the market and no matter how strong are the analysis there is always a probability of losing as trading is more of a probability field so make sure to always consider a good RR, risk small and aim higher. Your questions are very welcome!
Short
by JoeChampion
7
What happened with the Pound in 2022!The GBPUSD had so much potential heading into 2022, as markets anticipated some possibility of the UK navigating through the Brexit ordeal. The BoE was one of the first central banks to increase rates, BUT YET , we saw the Pound getting pounded down, from the 1.35 price area down to the HISTORIC low of 1.036, with huge speculation that the GBPUSD could even reach PARITY . In addition to what we already know (you can read more about it in the links below) DXY strength Russian-Ukraine conflict EURUSD reaching parity The decline in the GBPUSD was also driven by SIGNIFICANT political chaos. Prime Minister Boris Johnson was replaced in September by Liz Truss, who was replaced in October by Rishi Sunak (A change of 3 Prime Ministers in the space of 2 months) On 23rd September , UK Finance Minister Kwasi looked to boost the country's economic growth by introducing a series of tax cuts, totaling 45 billion pounds by 2026-27. However, the market was spooked by the scale of the fiscal giveaway and the immediate reaction was to sell UK govt bonds. While the FTSE 100 fell to its lowest level since March, the ground gave way on the GBPUSD as it crashed from the 1.1255 price level down to the 1.0360 historical low (23rd to 26th September) Further decline in the GBPUSD was saved by a quick intervention from the BoE as it pledged an unlimited long-dated bond-buying program to restore stability and orderly market conditions. Fortunately for the UK, the rapid change in the Prime Minister, BoE intervention, U-turn in tax policy, and introduction of a new austerity package has had some positive impact on the GBPUSD. In November, the new Finance Minister Jeremy Hunt released a series of spending cuts and tax rises in an attempt to plug the hole in the public finances. The GBPUSD has recovered strongly from the 1.0360 price level in September to reach the 1.25 price area in December. However, the UK pound is not out of the woods yet! Inflation in the UK still stands at 10.7% with interest rates at 3.50%. AND there is dissent within the BoE as the most recent rate decision votes indicated that 2 members voted to hold rates at 3.00% (7 voted to hike). Could the BoE risk a pivot at this point? Is there enough momentum in the current slowdown of inflation growth, that it could reach the BoE's target level? Stay Tuned for the 2023 outlook!
by JinDao_Tai
GBP/USD tumbles toward the 20-day SMA after Fed, BoE The GBP/USD dropped sharply on Thursday, mainly due to a stronger U.S. Dollar at critical times for currency markets, following decisions from the Federal Reserve, the European Central Bank and the Bank of England. As expected, the Fed, the ECB and the BoE raised key interest rates by 50 basis points, amid high inflation. There were no surprises there. At the Fed, Chair Powell maintained a somewhat hawkish tone, which, together with the macroeconomic projections, seem to forecast higher interest rates for a longer time than previously anticipated. The dollar fell initially but then reversed and strengthened during Powell's comments. On Thursday the appreciation took another magnitude, with the added bonus of risk aversion across financial markets. Main Wall Street's indexes fell by more than 2% on worries about the global growth outlook at times of monetary tightening. Those fears about growth are more significant in the United Kingdom. The outlook led two Bank of England's Monetary Policy Committee members to vote against raising interest rates. The other seven members voted for a hike. Two votes for "no change" were the surprise, that weighed on GBP. The pound weakened further following the European Central Bank meeting. U.S. economic data released on Thursday was mixed. Friday will be the turn of the PMIs across the world, the first numbers of activity during December. Poor readings may fuel risk aversion, which would favor the dollar against the pound. The GBP/USD uptrend is still on, but it has lost momentum. Thursday's reversal is a first sign of a potential top around 1.2450. The mentioned area capped the upside during the last three trading days. The decline extended to 1.2156, slightly above the 20 and 200-day Simple Moving Average. A consolidation below 1.2100 should point to more losses in the short term. In order to recover bullish strength, GBP/USD needs to break above the 1.2320 area. Such a scenario would again expose the critical resistance at 1.2450. A daily close above this last level could anticipate the resumption of the rally.
by Alex_Boltyan_FXAnalyst
ECB vs BoE: What's next for EUR/GBP?The European Central Bank (ECB) and the Bank of England (BoE) both raised interest rates by 50 basis points at their final meetings of the year. The Eurozone's policy rate was hiked to 2.5%, the highest in fourteen years, and the UK's to 3.5%, the highest since late 2008. In contrast to the relatively dovish BoE meeting, the ECB meeting was substantially more hawkish than the market had anticipated, prompting the EUR/GBP cross to surge. In a divided vote, the BoE decided to raise rates by 50bps, with one member (Mann) pressing for 75bps and two members (Tenreyro and Dhingra) preferring to maintain current rates. According to the BoE statement, more increases in the Bank Rate may be necessary due to ongoing inflationary pressures fueled by a tight labour market. In the first quarter of 2023, UK CPI inflation is expected to fall as household spending and property market indicators weaken. Even if the ECB lowered its speed of rate rises from 75bps to 50bps, it made it clear that interest rates will still have to climb consistently and by a steady pace to reach restrictive levels to get inflation back to 2% quickly. The ECB also indicated that quantitative tightening will begin in March 2023. The ECB will not reinvest all expiring securities' principal payments in the Asset Purchase Programme (APP), meaning its asset portfolio of eurozone bonds will fall at an average pace of €15 billion per month until Q2 2023, with the subsequent rate established over time. During the press conference, ECB President Lagarde reiterated that the ECB will rise with tenacity and that 50bps may be the right rate hike for the next meeting and the two after that. She also hinted that once the peak is achieved, "it won't be enough to hit and withdraw," and that high interest rates will be in place for a longer period of time. Historically, the interest-rate gap between the Euro Area and the UK has been one of the key driver behind the EUR/GBP exchange rate. Market reactions to the BoE and ECB meetings: Yields differential matter Before today's meeting, the market was highly dovish on the ECB, pricing in a peak of 2.8% next year, while it had already built in hawkish expectations on the BoE, pricing in a peak of 4.6% in the Bank Rate in August 2023. German bond yields soared by 15 basis points after the ECB rate announcement and during Lagarde's press conference, but UK gilt yields stayed nearly unchanged from pre-BoE meeting levels. The negative yield spread between German and UK sovereign bonds shrank throughout the curve today as investors repriced ECB rise expectations. The 2-year German-UK yield gap narrowed to -1% and the 10-year one to -1.2%.  In the coming weeks/days, market expectations for the ECB rate may continue to rise as ECB hawks are likely to reiterate their aggressive stance. The Bank of England's market pricing may stay broadly stable, given it has already incorporated heightened expectations ahead to the meeting. This may indicate that the negative yield disparity between German and British bonds will continue to narrow, exerting upward pressure on the euro-pound exchange rate. A further 30 basis point reduction in the negative yield spread between 2-year German bonds and UK gilts, lowering it from -1% to -0.70%, might drive EUR/GBP to 0.89 or near to the psychologically important level of 0.90.
by Capitalcom
GBP/USD edges higher, US PPI loomsThe British pound has posted slight gains today. In the European session, GBP/USD is trading at 1.2257, up 0.32%. After a rather uneventful week for the US dollar, next week could be marked by plenty of action, with a host of key releases on both sides of the pond. The BoE and Federal Reserve are expected to deliver 50 bp hikes, and we'll get a look at the latest inflation data from both the UK and the US. Like the Federal Reserve, the BoE has also circled inflation as public enemy number one, but Governor Bailey doesn't have the luxury of a strong economy to work with. With GDP in negative territory and inflation at a staggering 11.1%, the economy may already be experiencing stagflation, but Bailey can ill afford to allow inflation expectations to become more entrenched. Winter is likely to be a season of discontent, with railroad and other public workers threatening to go on strike, as the cost-of-living crisis has hit households hard. The Federal Reserve will be keeping a close eye on the US inflation report, which will be released just one day before the Fed's policy meeting. Inflation has eased over the past several months, but the Fed has been very cautious and is still reluctant to declare that inflation has peaked. The Fed has not looked kindly on market exuberance triggered by soft inflation reports, and paraded a stream of Fed members to remind investors that inflation remains unacceptably high and the fight to curb inflation remains far from over. The markets will get a look at US inflation data later today, with the release of the Producer Price Index (PPI). The index is expected to drop to 7.4%, down from 8.0%. A decline in PPI would reinforce expectations that we'll see a drop in CPI as well next week. 1.2169 and 1.2027 are the next support levels GBP/USD is testing support at 1.2169. Below, there is support at 1.2027
by OANDA
1
GBPAUDHello Traders. This is my view on GBPAUD. At first, the price has bounce up from the weekly support level, but now is touching the Weekly Resistance. Also, the Weekly Trend remains bearish from 2001, while any intraday 4H,1H Daily, whatever, is considered as a correction, personally speaking. That will be my entry with possible TP levels. The fundamentas in 8 days for GBP will push the price perhaps higher for GBP. So, we have to keep a look for AUD high impact news. I will be bullish in long term for this pair only if it breaks the upper supply zone. Please provide your comments! Goodluck!
Short
by The_Forex_Path
EURGBP BearishAbsent the lack of key fundamental surprises I am slowly leaning to a bearish stance on this pair. The economic situations between the two is very similar. Both are also experiencing a much milder winter than was previously expected which seems to be helping both Germany and the U.K. economically. In my opinion, the BoE is being more dovish than the ECB regarding inflation expectations and terminal interest rate levels. Perhaps in a bid to achieve price stability. Divergence between the recent upward movement and the indicators shown suggests this current bullish formation is weak and may soon be exhausted. I believe the pair will likely see a move to the downside. If the current ascending channel (white) fails, I’ll be expecting to see 0.8700, 0.8648 and 0.8600. POI for short : 0.8860 - 0.8900
Short
by jamesfrench73
2
Pound takes a dive, retail sales nextThe British pound is sharply lower on Thursday as the US dollar has rebounded against the major currencies. In the North American session, GBP/USD is trading at 1.1787, down 1.07%. We continue to see sharp swings from the pound in November. Jeremy Hunt's Autumn Statement was much more in keeping with the difficult economic times than the ill-fated mini-budget back in September, which set off a financial crisis and emergency intervention from the Bank of England. The Finance Minister's budget outlined major spending cuts and tax hikes and Hunt stated that the government and the BoE were working in "lockstep".  The fiscal austerity in the new budget is a step in the right direction, but the pound nevertheless has taken a tumble today. The Office for Budget Responsibility (OBR) forecast indicated that the UK is currently in a recession, which will see unemployment jump from 3.5% to 4.9%. The BoE's outlook is even worse, with unemployment forecast to hit 6.5% and negative growth expected in the second half of this year, throughout 2023 and into the first half of 2024. GDP declined by 0.2% in the third quarter, and the headwinds look formidable for the UK economy and the British pound. The investor euphoria which sent the stock markets rallying after the soft inflation report has taken a pause, and the US dollar has rebounded. Fed policy members sought to dispel any thoughts of a Fed pivot, reminding the markets that the Fed was planning to raise rates higher than they had anticipated. The hawkish Fed speak may or may not have convinced investors to settle down, but a strong US retail sales report clearly did the job. The headline and core releases both posted strong gains of 1.3%, dampening sentiment that the Fed was turning dovish. US consumers continue to spend despite inflation and rising rates, an indication that the Fed can continue to raise rates and probably avoid a deep recession. Interest rates are expected to peak at 5% or slightly higher, which means that the Fed is highly likely to continue tightening into next year. . There is resistance at 1.1961 and 1.2030 GBP/USD has broken below support at 1.1896 and 1.1786. Below, there is support at 1.1660
by OANDA
UK 11% inflation and supply chain shock is starting to fadeUK inflation goes to 11% a 41-year high, goods prices continue to increase. BOE says supply chain shock is starting to fade, however, with this inflation rate, the next couple hours the EURGBP will certainly go long. Chart: We have a support that was not tested after the dates of UK. But we can see the RSI in a oversold zone and after changing the direction the MACD is going up. The MA of BB has already been tested with some candles shadows, but none of them crossed it.
Long
by AFCapital21
2
Pound rises even as inflation tops 11%The British pound has moved higher on Wednesday. In the European session, GBP/USD is trading at 1.1934, up 0.56%. The pound roared on Tuesday, gaining close to 1% and punching past the 1.20 line for the first time in three months. It has been a busy time for sterling, which has been marked by sharp swings that would make an exotic currency blush. The pound's volatility has been especially pronounced in the month of November. The US dollar has hit a rocky patch and the pound has taken full advantage, climbing 3.5% this month. UK inflation continues to rise and hit a staggering 11.1% in October, a 41-year high. The upward trend continued despite the government introducing an energy price guarantee. Inflation jumped from 10.1% in September and ahead of the consensus of 10.7%. Core CPI remained unchanged at 6.5%, but was higher than the forecast of 6.4%. The Bank of England hasn't been able to stem rising inflation despite tightening policy but will be hoping that its jumbo 0.75% hike earlier in November will take a bite out of the next inflation report. The UK economy is facing a double-whammy of high inflation and a recession, and all eyes will be on Finance Minister Jeremy Hunt, who will announce the government budget on Thursday. Hunt will aim to restore the government's credibility and stability, after the recent political soap opera which resulted in three different prime ministers in a matter of months and significant financial instability. The UK employment report on Tuesday was lukewarm, with unemployment ticking higher to 3.5%, up from 3.4%. The Bank of England will be concerned about the increase in wage growth, which will create even more inflation. Wages excluding bonuses rose to 5.7%, up from 5.5% and ahead of the consensus of 5.6%. The BoE will be under pressure to continue hiking aggressively, even though this will hurt the struggling UK economy. GBP/USD has pushed above resistance at 1.1878. The next resistance is 1.2030 1.1767 and 1.1660  are providing support
by OANDA
1
Pound soars despite weak job dataThe British pound has reversed directions on Tuesday and posted sharp gains. In the European session, GBP/USD is trading at 1.1902, up 1.22%. The pound has punched above 1.19 for the first time since August 19th. The UK employment report was soft, with unemployment ticking higher to 3.5%, up from 3.4%. Unemployment rose by 3.3 thousand, down from 3.9 thousand but well off the consensus of -12.6 thousand. The BoE will be most concerned about the increase in wage growth, which will create even more inflation, at a time when inflation is above 10%. Wages excluding bonuses rose to 5.7%, up from 5.5% and ahead of the consensus of 5.6%. There isn't much slack to speak of in the labour market and the BoE will be under pressure to continue hiking aggressively, even though this will hurt the struggling UK economy. The Fed may be breathing a bit easier today, as the exuberance which sent the stock markets flying last week appears to have subsided. Investors jumped all over the soft inflation report, as risk sentiment soared and the US dollar retreated. Fed members have responded by sticking to a hawkish script, as any dovish signals could complicate its battle to bring down inflation. Fed Vice Chair Brainard said on Monday that she favored slowing the pace of rate hikes, but that further hikes were required in order to bring down inflation. Brainard's stance was echoed by Fed member Waller who said that while the Fed may ease up on the size of future rate hikes, it should not be seen as a "softening" in its fight against inflation. Waller added that the 7.7% inflation reading in October was "enormous", a possible rebuke of the exuberance shown by investors to the drop in inflation. . GBP/USD has broken through several resistance lines today. The next resistance lines are 1.2030 and 1.2224 1.1703 and 1.1648 are providing support
by OANDA
GBPJPY BUYHello traders. GBPJPY has performed a quite bullish price action. But the market makers' game is usually trapping the retailers on Mondays and reverse the trend later during week. So, I am sceptical. The pair definitely needs corrections and that is not only an opinion of mine. It is overbought so many big players will close their profits pretty soon. However, it remains bullish in technical analysis and GBP is bouncing from the lows while JPY keeps loosing value. Drawing Fib levels from the Swing Low to Swing High, based of the last 4H impulse move, I consider the below Fib retracement area as a great long opportunity. 163.585 - 166.057 Note: it is at a weekly Supply level but I see the potential to break it and aim for Multiyear highs. good luck
Long
by The_Forex_Path