When is the BOE rate decision and how could it affect GBP/USD?
BOE monetary policy decision - Overview
It’s a ‘Super Thursday’ again and time for the Bank of England’s (BOE) decision on its monetary policy, which will be announced at 1100GMT, accompanied by the release of Quarterly Inflation Report (QIR) and the minutes of its policy meeting. The May meeting will have the post-policy press conference held by Governor Mark Carney at 1130 GMT.
The BOE is widely expected to keep the benchmark bank rate unchanged at 0.75%, with a 9-0 voting composition in favor of rates on hold. Today’s policy meeting is likely to be very interesting, as markets eagerly await the UK central bank’s outlook on the interest rates for this year amid improvement in the UK economic situation and the Brexit extension until October 31st.
Craig Erlam at MarketPulse notes: “At a time when central banks around the world are moving away from pursuing tightening policies and instead adopting a more patient approach, the Bank of England may go against the trend which makes Thursday's meeting all the more interesting.”
Meanwhile, with the regard to Carney and company’s economic forecasts and the QIR, FXStreet’s Senior Analyst, Yohay Elam, writes: “The BOE may stick to its forecasts and claim it is unable to make any political assumptions. The answer to the question depends heavily on the Bank's projections in the QIR. If the recent drops in prices are seen as temporary, the BOE may stick to its guns and continue saying it wants to raise rates. In this case, GBP/USD has room to rise.”
How could it affect GBP/USD?
In the wake of a dovish tilt, i.e., if the BOE joins its global peers” dovish actions and removes the mention of a rate hike, the pound could come under heavy selling pressure, with the GBP/USD pair likely to breach the 1.3000 support.
Technically, “support awaits at 1.3020 that capped an upwards move in late April. 1.2960 was the low point in March and separates ranges. 1.2920 held the pair down late last week, and 1.2870 is the lowest point in the past two months. The round number of 1.3100 was the top point on Thursday and serves as initial resistance. It is followed by 1.3140 that held it down in mid-April and by 1.3200 that was a high point in early April,” Yohay adds.
Key Notes
BoE Preview: Major Banks are forecasting no change in policy today
GBP/USD Forecast: Bulls take a breather near 1.3100 mark post-FOMC, BoE Super Thursday eyed for fresh impetus
UK construction PMI rises to 50.5 in April, beats estimates
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.