GBP/USD trades near flat at around 1.3050
The pound is holding up just fine ahead of the BOE meeting later to come and rightfully so. Barring any surprises, the meeting today will be a bit of a non-event. The central bank isn’t expected to move to hike rates until next May and there isn’t anything too damning or outstanding in economic data releases recently to prompt a possible change in that outlook.
That said, the only key thing to look out for here will be the central bank’s views on the economy and Brexit. There may be a hint or two on global risks and possible risks faced moving forward but it shouldn’t derail the BOE’s rate path at all. The more immediate concern will of course be Brexit.
I doubt that Carney and co. will signal overbearing worries regarding Brexit but some uncertain tones could nudge the pound a little lower. But the overall outlook should remain the same. In essence, the BOE meeting here has little relevance apart from reiterating the current possible Brexit scenarios and their impact on the central bank’s capabilities.
Hence, I don’t believe the statement or decision later will do much to move the pound. The only thing that will move the pound will be a divergence from the 9-0 voting expectations. Of note, this will be the first meeting for new MPC member Jonathan Haskel, who replaces the hawkish Ian McCafferty.
In short, there won’t be any changes to the bank rate and the focus will be on any divergence from the 9-0 voting expectations as well as the central bank’s views on Brexit.
As for levels to look out for in cable, upside there is resistance at the 76.4 retracement level @ 1.3083 followed by offers around 1.3100. Further resistance is seen around the swing region just under 1.3150.
Meanwhile, towards the downside there is support arising from the upwards sloping trendline around 1.3030 followed by the 100-hour MA @ the 1.3000 handle. Below that, there is the swing region support around 1.2970-80 before the 1.2943 resistance-turned-support will be tested alongside the 200-hour MA @ 1.2944.