GBP faces a sell-off on dismal market mood, BoE policy eyed

GBP/USD Forecast: A dovish BoE guidance could drag Pound Sterling lower toward 1.2600

After closing the second consecutive day in negative territory on Wednesday, GBP/USD continued to edge lower early Thursday and was last seen trading at around 1.2650. Although the technical outlook points to a bearish tilt in the near term, the pair faces a two-way risk heading into the Bank of England’s (BoE) policy announcements.

The US Dollar started to gather strength late Wednesday after Federal Reserve (Fed) Chairman Jerome Powell said that he doesn’t think that a rate reduction in March in the base case scenario. The Fed left the policy rate unchanged at 5.25%-5.5% as expected and the policy statement didn’t make a reference to willingness to tighten policy further if needed.  Read more…

Pound Sterling faces a sell-off on dismal market mood, BoE policy eyed

The Pound Sterling (GBP) remains under pressure ahead of the interest rate decision by the Bank of England (BoE), which will be announced at 12:00 GMT. Most Monetary Policy Committee (MPC) members are expected to support maintaining the status quo as easing price pressures indicate that further quantitative tightening is not on the table. BoE policymaker Swati Dhingra, who has remained concerned about the consequences of over-tightening borrowing rates, could vote in favor of a rate cut.

BoE Governor Andrew Bailey and other members have been stating that it is too early to speculate on rate cuts despite encouraging progress in inflation declining towards 2%. UK’s headline inflation is significantly down from a multi-decade high of 11.1% to 4.0%. However, it is still double the desired rate of 2%, forcing policymakers to maintain interest rates in the restricted trajectory. Read more…

GBP/USD could be just a 1.2600 story on BoE dovish pivot – ING

A  less hawkish stance from the Bank of England (BoE) should weigh on Pound Sterling (GBP), economists at ING say.

Downside risks to Sterling will emerge from both the BoE dropping its tightening bias and the voting structure shifting from a 6-3 (three for a hike) to a 9-0. We rarely hear from the BoE so in a way, this would be the BoE’s chance to play catch-up with some of the dovish rhetoric being used by both the Fed and the ECB. Read more…