FOREX
It is Bank of England day, and the pound is losing ground to the euro and the dollar, ahead of the latest rate decision announcement. Throughout this hiking cycle, the BoE has tightened monetary policies using a dovish tone, citing recessionary risks and global head winds. This pattern has consistently led to a decline in sterling following the announcements. Judging by this morning's price action, the markets are anticipating a similar outcome. An almost certain rate hike of 25 basis points is already baked into the value of the currency, so what investors will really be looking forward to is the approach of Governor Andrew Bailey, when he speaks after the announcement. The bank’s economic forecasts will be of particular interest, as an optimistic stance on inflation, assuming a rapid decline, could signal the intention to leave further hikes on hold. Such a scenario would be bearish for the pound, likely resulting in further weakness against the euro and the dollar.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
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