A number of fundamental movers have impacted Cable since the start of this week. Aside the Brexit concerns, the Bank of England (BOE) is contemplating on an interest rate cut. What are the odds that this will happen and how will the BoE rate cut impact GBPUSD?
14 January, 2020 | HYCM – The Bank of England has been one of the few major central banks that did not join the trend of central banks who cut their interest rates last year. Nevertheless, the Great British Pound (GBP) was dragged down majorly by Brexit concerns and uncertainties throughout 2019. Yet, the Bank of England was able to avoid the general global monetary policy easing bias of 2019.
GBPUSD Fundamental Movers Traders Need to Pay Attention on
The GBP has been pressured at the start of this week on the news that a number of Bank of England members are now biased towards a rate cut. Vlieghe said over the weekend that he would need to see an improvement in the data to justify waiting to lower the current rate of 0.75%. BoE members Saunders and Haskel would like to see a rate cut and on Wednesday I am expecting Saunders to detail his case for a rate cut when he speaks at 0840GMT on Wednesday.
The UK GDP data out yesterday showed a dovish m/m GDP reading of -0.3% vs 0.0% expected and +0.1% prior. Manufacturing production was also lower at -1.7% vs -0.3% expected, so these weak data points added to the bearish GBP outlook. In this environment I would expect further GBP weakness through today and into Saunders speech tomorrow am UK time.
Read more: 2020 Biggest GBPUSD Fundamental Mover
HYCM Chief Currency Analyst: Expect GBPUSD Sellers on Retracements
How will the BOE rate cut impact GBPUSD? Looking at the GBPUSD pair we can see that it has been steadily sold off from the 1.3500 highs. Since the UK election in December 2019. I would expect sellers on retracements on this pair. However, watch out for Saunders speech on Wednesday for potential GBP volatility. Since it will depend on what path he indicates ahead for interest rates.
This concludes HYCM GBPUSD analysis for 14th of January. Benefit of GBPUSD’s volatility this week. If you don’t have a trading account yet, then you can simply open a trading account with HYCM.