BOE Up Next
Today’s BOE rate decision will be the main focus for FX traders. On the back of the .5% hike from the Fed yesterday, some market participants are adjusting their views, anticipating a larger hike than the .25% consensus forecast. However, it is worth noting the differences between conditions for the Fed and the BOE, namely that the BOE has already hiked three times and so is less pressed to use a bigger .5% rate hike. Additionally, while the Fed hiked rates by .5%. this was the increase already priced in, with the Fed opting against going for a larger .75% hike. With this in mind, the base case scenario for a .25% hike today appears most likely. This is particularly true given the ongoing growth issues plaguing the UK outlook. Many fear that the current cost-of-living crisis in the UK, along with tighter monetary conditions, will drag growth down across the rest of the year. Consequently, the BOE is likely to want to avoid any steeper rate increases if possible.
Where to Trade Today’s BOE Meeting?
GBPAUD
Given the recent hawkish shift at the RBA, GBPAUD looks a solid candidate for a deeper move lower should GBP sell-off on today’s BOE meeting. Price was recently rejected at the 1.7811 level (as per a recent market spotlight). With both MACD and RIS turning bearish here and with the retail market heavily long, bears can look for a break of the 1.7218 level for fresh shorts targeting a move down to 1.6726 next.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.