It’s shaping up to be an exciting week for pound pairs as the central bank will be making its policy announcement.
Here’s what market watchers are expecting:
BOE decision and MPC minutes (Feb. 4, 12:00 pm GMT)
- No actual changes to interest rates at 0.10% or asset purchases at 895 billion GBP expected
- Monetary policy committee members likely to reach a unanimous vote on this decision
- Any votes to cut or ease might trigger a bearish reaction from sterling
- Quarterly monetary policy report also up for release, and this provides the BOE’s projection for inflation and economic growth over the next two years
- Significant downgrades to GDP and CPI forecasts on account of the pandemic could mean losses for the U.K. currency
Technical snapshot
- Moving averages suggest that pound pairs are mixed, with majority in bullish territory
- In particular, GBP/JPY, GBP/CHF, GBP/CAD and GBP/USD might be in for more gains
- EUR/GBP is on a strong bearish trend while GBP/AUD and GBP/NZD are on slowing declines
- The pound has been most volatile against the Kiwi and Aussie in the past seven days
- It has moved an average of 123.1 pips against NZD and 111.9 pips versus AUD in a day
