Following three attempts to defy any rate change, while still being dovish, the Bank of England (BOE) is immense pressure to act during the “Super Thursday” at 06:00 AM GMT. Although major market forecasts are against any rate change, hints about more Quantitative Easing (QE) and negative rates will be the key to watch for the GBP/USD traders. The routine Interest Rate Decision will be accompanied by the release of the minutes of its policy meeting and the Quarterly Inflation Report (QIR). Following these catalysts, the market sees the post-policy press conference held by Governor Andrew Bailey, around 11:30 GMT.
Looking backward, the British central bank dragged key interest rate to 0.10% and added £200 billion in its Quantitative Easing (QE) program, currently at £745 billion, during March. However, the coronavirus (COVID-19) wave 2.0 has pushed the “Old lady” to mark more stimulus in order to keep the latest gains of the British pound.
In their latest comments, BOE policymakers have shifted earlier bullish bias and tried conveying the least damages caused by the negative rates. Adding to this, Governor Bailey has been bold to highlight the possibilities of going further down on rates, which in turn makes today’s even crucial for markets.
How could it affect GBP/USD?
While more is always on the table for all the central banks amid the current COVID-19 crisis, the BOE could consider recent economic improvements to keep the status quo. However, any more rate cuts (highly unlikely) or further addition to the QE can weigh on the GBP/USD pair. Further, the quarterly economic projections and Governor Bailey’s press conference will be watched closely for near-term directions, which aren’t expected to provide any upbeat signs considering the virus outbreak and its economic impact on the UK.
The Cable currently prints mild gains of 0.12% while flashing a two-day winning streak to 1.3130. The pair seesaws near the highest since March, flashed last Friday while heading into the London open on Thursday. Considering the pair’s repeated failures to cross a downward sloping trend line since January 31, 2020, at 1.3170 now, coupled with overbought RSI conditions, any disappointment from the BOE will be enough for bears to enter and attack 1.3000 psychological magnets.
GBP/USD LONG (Buy)
ENTER AT: 1.3149