By Michael Baker

Tomorrow sees the busiest day of the week with the Interest Rate decisions from the Bank of England (BOE) at 12:00 and the European Central Bank (ECB) at 12:45. Both have potential to be high risk events, however, it is expected that rates will remain on hold.

Last month the Monetary Policy Committee (MPC) raised rates in the UK for the first time since November 2017, therefore it is highly unlikely we will see any policy action from the Bank of England, with the entire MPC expected to vote against a hike.

The ECB meeting will be watched for any reactions to recent economic data. In previous meetings the Central Bank had set out their intention to end asset purchasing in December, with rates to hike at the tail end of next year. This month we will see the committee update its economic projections; however, these are unlikely to have changed from their last estimations.

Sterling has been under pressure since April in a combination of uncertainty regarding Brexit and the rampant Dollar. Recently we hit the 23.61% fib from the April high to the August low. We seem to be trading in a trend channel which is showing signs that we are attempted to retrace. Concern here would be if we were to break out to the low of channel as this may resemble a flag break with the pole being 1,727, possibly signally further declines.

GBPUSD Daily Chart – Sterling beginning to pullback

ETX-BOE-IMAGE

Source: ETX Capital



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