The governor of BoE Andrew Bailey will make a statement today at 17:00 MT time. Notably, the market becomes often volatile during his speeches, as traders try to get some hints on the future monetary policy and also interest rates. As for the interest rates, they are expected to stay unchanged. Speaking about the monetary policy, there are some signs that the BoE may increase the money supply.
Bailey has recently commented that there is high uncertainty over the full recovery of consumer spending in the UK after the virus slump. He even emphasized that this problem is more significant than the Brexit issue. Besides, the central bank assured last week that it didn’t run out of the ammunition and would do more, if necessary. Deputy Governor Ramsden mentioned: “we could do it fast if market dysfunction required it.” Governor Bailey also mentioned that it’s crucial for the BoE to “go big and go fast.” This leads to the assumption that the BoE may increase its QE program and, as a result, weigh on the British pound.
Technical outlook
From the technical perspective, the GBP is loosening against the strong USD, but outperforming the weak euro. Let’s discuss GBP/USD. The pair has sharply dropped after reaching a fresh high unseen since last year at 1.3470. It’s confidently dipping down. The move below the low of August 27 at 1.3180 will drive the price lower to the next support of 1.3100. Resistance levels are at 1.3350 and 1.3470.
Be ready for the fresh volatility at 17:00 MT time as economic releases will be out from both sides: the BoE statement and US ISM Non-Manufacturing PMI!
If PMI is better than the forecasts, GBP/USD will fall. Otherwise, if PMI is worse than the forecasts, GBP/USD may rise.
Source : GBP/USD Ahead of Big News
