All eyes on the BoE

BoE is widely expected to remain on hold, keeping interest rates at +0.50%. Market has priced in the scenario with a probability of 98.58%. The bank may want to retain flexibility ahead of the Brexit negotiations uncertainty, regarding the future rate hike path and hence avoid committing to any further rate hikes. We also see the case for forecasts of stronger growth and maybe lower inflation rates with a horizon of two years. We expect the overall effect of the voting, inflation report and inflation letter to be supportive for the GBP.

Cable dropped yesterday and tested the 1.3875 support level. We could see the pair rising today, as mentioned in the fundamentals before. Should the bulls take the reins we could see the pair breaking the 1.4040 resistance line and aim for the 1.4168 resistance level. On the other hand, should the bears take the driver’s seat, we could see the pair breaking the 1.3875 support line and even the 1.3749 support zone.