UK Markets Week Ahead: BOE Hike May Not be Enough


  • Bank of England rate decision, MPC minutes and the Quarterly Inflation Report.
  • GBPUSD struggling to move higher.

The New DailyFX Third Quarter Forecasts are now live including a fresh look at GBP.

UK Asset Markets Look Ahead to BoE ‘Super Thursday’

UK Financial markets are pricing in an 85% chance of a 0.25% interest rate hike on Thursday but that may not be enough to prevent Sterling from sinking further. The latest MPC and the closely-watched Quarterly Inflation Report will also be released – ‘Super Thursday’ – and may include updated inflation and growth forecasts. Brexit however remains the main driver of GBP and the British Pound is unlikely to move higher until some good news comes back from Brussels. If the BoE do not hike, GBP will fall sharply and test recent support levels.

The FTSE 100 continues its inverse correlation with GBPUSD and is pushing higher. This week the UK banks release their latest earnings alongside oil giant BP. The UK banks will hope for a rate hike to help improve their profitability/narrow their losses, so will be hoping Mark Carney pulls the trigger on Thursday.

GBPUSD Daily Price Chart (October, 2017 – July 30, 2018)

UK Markets Week Ahead: BOE Hike May Not be Enough | Webinar

IG Sentiment Datashow 69.1% of traders are net-long GBPUSD with the ratio of traders long to short at 2.24 to 1. In fact, traders have remained net-long since Apr 20 when GBPUSD traded near 1.40029; price has moved 6.4% lower since then

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— Written by Nick Cawley, Analyst

To contact Nick, email him at nicholas.cawley@ig.com

Follow Nick on Twitter @nickcawley1



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