Why The BoE Might Not Be In A Hurry To Lower Interest Rates
The UK CPI printed in line with expectations and dropped to the Bank of England’s target of 2 percent for the first time in nearly 3 years. However, while most of the contributors to the CPI headline figure (YoY%) seem under control, services inflation in the UK remains uncomfortably high. Therefore, today’s Bank of England monetary policy decision is likely to point to this still-elevated services inflation print and thus, the lack of urgency to alter interest rates. Consequently, traders bought GBP/USD in the minutes after yesterday’s CPI release.
A greater chance of a BoE rate cut is seen in September.
The BoE rate decision is scheduled for 11:00 GMT today.
GBP/USD: The pair managed to hold slightly above 1.27 following Wednesday’s UK inflation print. However, a leg lower is still highly possible and we will therefore pay attention to a price break below 1.2620 and further a sustained break below 1.26 in order to sell sterling towards 1.2550. On the other side, any bullish attempts above 1.2765 could be limited until 1.28 – the current resistance.
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Our trading ideas for today 20/6/24:
GBP/USD
Long @ 1.2725
Short @ 1.2690
Settings for all trades today: Entries from 8:00 am UTC, SL 25, TP 40
Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.
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