BoE Disappoints Sterling Bulls

The Bank of England disappointed sterling bulls that have hoped for a far more hawkish outcome at yesterday’s BoE decision. Consequently, the pound corrected recent gains until a daily low of 1.3890. The BoE reiterated that it does not intend to tighten policy until there is clear evidence that the pickup in inflation will persist for a sustained period. As expected, Andy Haldane voted for a reduction in the stimulus while the other MPC members voted 8-1 to maintain the stimulus for now. Policy makers are due to revise inflation forecasts in August where we expect bigger market movements at the time of the policy decision.

Amid thin liquidity conditions we expect both EUR/USD and GBP/USD to fluctuate within relatively narrow trading ranges.

GBP/USD: We pencil in a short-term price range between 1.4070 and 1.3750.

EUR/USD: For bullish momentum to accelerate we will need to see a fresh break above 1.1960 with a next target at 1.20. Below 1.1910, the focus shifts to lower targets around 1.1870.

DAX: Chances increase in favor of a run for 15900 as long as 15400 holds on the downside.

Have a nice weekend.

We wish you good trades!

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