GBP/USD: What To Expect Today

The GBP/USD has staged a notable rebound from its post FOMC low around 1.38 to a test of 1.40 yesterday. Sterling bulls now wonder whether there could be a run back towards 1.41 and possibly even 1.42 but today’s price action will mainly hinge on the Bank of England rate decision.

The BoE is expected to leave its monetary policy unchanged while there is no updated monetary policy report. The focus will be instead on the guidance for QE and there are rising expectations for a relatively more hawkish Bank of England, signaling a shift in policy. If this is confirmed the pound could extend its recent rebound towards higher targets.

It will be the last rate decision for BoE’s Chief Economists Andy Haldane who steps down this month. Haldane is the BoE’s most outspoken contrarian and inflation hawk and his removal could see a more dovish tone at future BoE meetings. Even if Haldane votes in favour of a reduction in asset purchases, his vote could be dismissed by the market while more attention will be placed on whether other MPC members vote to curb the scale of the central bank’s asset purchase program. However, while risks are more skewed to the hawkish side, there is also danger of disappointment for bulls. Traders should brace for higher volatility around the decision at 11:00 UTC but should not expect too much from today’s meeting as the BoE is likely to wait until August for changes in its guidance and further tapering.


Given the more optimistic outlook in the U.K. traders brace for an extension of pound gains but given the Federal Reserve’s hawkish pivot gains might be limited in this pair. We see a next higher target at 1.4090. On the downside, the 1.38-handle has proved to hold. In case of a disappointment from the BoE, the pound could extend losses towards 1.3750 and 1.3650.

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Euro Appeared Unaffected By Geopolitical Tensions

Dear Traders,

The euro remained resilient amidst heightened tensions between Turkey and Russia. The European currency was capped at 1.0670/75, resulting in a barrier for any bullish engagements. While other currencies such as the JPY benefitted from safe haven flows after geopolitical tensions overshadowed financial markets, the U.S. dollar received less attraction as a safe haven. Political analysts consider a major escalation unlikely given the risks associated with any conflict between Russia and Turkey as a NATO member.

The British pound traded lower on dovish comments from Bank of England officials. BoE Governor Mark Carney said in testimony to lawmakers that interest rates are likely to remain low for some time. BoE Chief Economist Andrew Haldane sounded even more dovish saying risks to the inflation outlook were to the downside. So all in all, given the bleak outlook, sterling could be vulnerable to further losses in the near-term. The currency pair marked a recent support at around 1.5050. Next target is 1.50.

Yesterday’s U.S. data came in mixed and failed to trigger a big reaction in the USD. The focus will now shift to Personal Consumption Expenditure and Durable Goods Orders, scheduled for release at 13:30 GMT. U.S. New Home Sales are due for release along with Michigan Confidence at 15:00 GMT.


The euro is trending downwards. A current resistance can be found at 1.0690/1.07. Any bullish breakouts above 1.07 are likely to be limited until 1.0760-75. A lower support could currently be at 1.0575, from where some pullback may occur.



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Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2015 Maimar-FX.