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BOE monetary policy decision – Overview

All eyes are set on the  Bank of England’s  (BOE) ‘Super Thursday’ events, with the main focus likely to be on the release of  Quarterly Inflation Report (QIR) (at 12 GMT) and Governor Carney’s speech at the post-policy press conference scheduled at 1230 GMT.

At Its November monetary policy meeting held today, the BOE is expected to announce no changes to its monetary policy settings, with the benchmark interest rates to be left on hold at 0.75%. The voting composition is likely to stay 9-0 in favor of the status-quo.

Hence, markets will closely eye the QIR, especially after the UK inflation dropped back towards the BOE’s policy target last month. Traders will also watch out for any changes in the voting pattern and Carney’s presser for fresh hints on the central bank’s rate hike outlook, given the ongoing Brexit uncertainty and tightening labor market.

In the view of FXStreet’s Editor-in-Chief, Mario Blascak, PHD, “the Bank of England now has more time to maneuver and watch how the labor market is affecting UK wages and inflation at the end. The next move on UK rate will see the UK officially outbound from the European Union making August or possibly November next year conditionally realistic. Of course depending on the upcoming Brexit deal and the data. That’s the sure shot.”

How could it affect GBP/USD?

Haresh Menghani, Analyst at FXStreet, notes: “Even from a technical perspective, the pair has managed to make it through an important confluence resistance, comprising of a two-week-old descending trend-line and 23.6% Fibonacci retracement level of the 1.3237-1.2694 recent leg of downfall. The mentioned confluence resistance break-point, near the 1.2820 region, now seems to protect the immediate downside and any subsequent slide seems more likely to attract some fresh buying around the 1.2800-1.2780 region.”  

“Meanwhile, the bullish set-up support prospects for an extension of the positive momentum further towards reclaiming the 1.2900 handle, also coinciding with 38.2% Fibonacci retracement level. A follow-through buying has the potential to continue lifting the pair further towards 50% Fibonacci retracement level resistance near the 1.2960-65 region en-route the key 1.30 psychological mark,” Haresh adds.

Key Notes

BoE Preview: 7 Major Banks expectations from November meeting

GBP/USD falls from highs as UK officials deny Brexit deal on financial services

UK manufacturing PMI drops sharply to 51.1 in October, a big miss on expectations

About the BOE interest rate decision

BOE Interest Rate Decision is announced by the  Bank of England. If the BoE is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the GBP. Likewise, if the BoE has a dovish view on the UK economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.