GBP/USD: Vulnerable To A Pullback On A Sell-The-Fact Reaction

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In our preview of the Bank of England, we suggested that the recent rise may trigger a sell-off as the news comes out. Here is a similar view from TD:

Here is their view, courtesy of eFXnews:

TD FX Strategy Research discusses GBP outlook ahead of the BoE November policy meeting on Thursday.

We expect the Bank of England to hike Bank Rate by 25bps tomorrow; this will be the MPC’s first rate hike in over 10 years. The vote is likely to be 7-2 in favour of a hike (with Ramsden dissenting, alongside one of Cunliffe or Tenreyro), though we see risks of an 8-1 or 6-3 outcome,” TD projects.

Recent gains leave GBP vulnerable to a pullback unless the MPC sends further hawkish signals through the vote or guidance on future rate path.

Our base case suggests a “sell-the-fact” reaction is likely for sterling, but a surprisingly hawkish outcome would extend its rally until focus turns to the next round of Brexit negotiations (9 Nov),” TD argues.

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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