BOE Up Next

GBPUSD is softening ahead of the upcoming BOE meeting due at midday London time. The bank is widely expected to keep rates on hold with uncertainty around how the bank is likely to signal near-term policy moves. A rally in the Dollar today on the back of some hawkish details in the March FOMC yesterday is creating the risk of a drop lower in the pair if we see a dovish skew to the meeting today. In particular, traders will be monitoring the voting split to see if there is any dovish shift which could point to rising near-term rate-cut chances. Given the shift from former hawkish member McCann in favour of a larger cut at the last meeting, further movement in the voting split could be highly market moving regardless of rates remaining unchanged for now.

Data Focus

Away from the voting split traders will be looking to the latest guidance and assessment from governor Bailey. Recent stickiness in services inflation, and also today’s jobs data which showed unemployment steady at 4.4% and wage growth at 5.8%, suggest the BOE head is unlikely to sound more dovish than last time around. However, if the bank is seen more concerned over trade tariff risks this could prompt a bearish reaction in GBP. Again, given the current strength in USD, any softness in GBP will be amplified today.

Technical Views

GBPUSD

The rally in GBPUSD has stalled for now into the 1.3017 level. With momentum studies turning lower, the pair could see a deeper correction near-term. However, while price remains above the bull trend line and the 1.2685 level, focus is on a continuation higher with 1.3264 the next target for bulls.