Macroeconomic overview
The Bank of England will simultaneously publish the February Inflation Report, the MPC policy decision and the MPC minutes on Thursday. We expect the Committee to vote unanimously to keep the stance of monetary policy unchanged.
The BoE is widely expected to revise up its short-term growth and inflation forecasts following reassuring recent UK data, but the uncertainty surrounding soon-to-start Brexit negotiations is expected to keep it cautious.
Governor Mark Carney, in a speech on January 16, cautioned that developments since the Brexit vote may require a more hawkish monetary policy. He said, “Recently, there have been signs of continued solid consumer momentum domestically and a stronger growth outlook globally. The MPC will monitor developments in the light of its inflation tolerance, and will explain its assessment and policy stance accordingly.”
We do not think the BoE inflation report will be a big shock. It may sound a bit more hawkish but we do not expect a clear hint at the possibility of tighter policy.
Technical analysis
The EUR/GBP has not broken the support at 0.8450, but is still below 7-day exponential moving average, which gives no clear short-term outlook from the technical analysis point of view. A close above 0.8550 would be a stronger signal that recent GBP rally is over.
Trading strategy
We expect the BOE to remain cautious on Thursday despite upwardly revised inflation and growth forecasts. That is why any increases in the GBP may be limited. On the other hand, the Fed is unlikely to signal timing of its next hike on Wednesday, which may strengthen the EUR across the board. We have placed EUR/GBP bid at 0.8480, but this strategy may be relatively risky.
More forex trading strategies growthaces.com
The Bank of England will simultaneously publish the February Inflation Report, the MPC policy decision and the MPC minutes on Thursday. We expect the Committee to vote unanimously to keep the stance of monetary policy unchanged.
The BoE is widely expected to revise up its short-term growth and inflation forecasts following reassuring recent UK data, but the uncertainty surrounding soon-to-start Brexit negotiations is expected to keep it cautious.
Governor Mark Carney, in a speech on January 16, cautioned that developments since the Brexit vote may require a more hawkish monetary policy. He said, “Recently, there have been signs of continued solid consumer momentum domestically and a stronger growth outlook globally. The MPC will monitor developments in the light of its inflation tolerance, and will explain its assessment and policy stance accordingly.”
We do not think the BoE inflation report will be a big shock. It may sound a bit more hawkish but we do not expect a clear hint at the possibility of tighter policy.
Technical analysis
The EUR/GBP has not broken the support at 0.8450, but is still below 7-day exponential moving average, which gives no clear short-term outlook from the technical analysis point of view. A close above 0.8550 would be a stronger signal that recent GBP rally is over.
Trading strategy
We expect the BOE to remain cautious on Thursday despite upwardly revised inflation and growth forecasts. That is why any increases in the GBP may be limited. On the other hand, the Fed is unlikely to signal timing of its next hike on Wednesday, which may strengthen the EUR across the board. We have placed EUR/GBP bid at 0.8480, but this strategy may be relatively risky.
More forex trading strategies growthaces.com
