Bank of England - Rate Decision on 4th August 2016
The BoE will decide tomorrow on its interest rate decision and there is an expectation of a 25bps cut.Market also expects an added QE. Soon after the #Brexit it was an overall expectation for a cut and BoE in its last meeting did not act.Today we have the services PMI coming up and a weaker PMI would only put more pressure on the BoE to act tomorrow.A rate cut with added QE will only be a negative for the currency (GBP).The pic is a price movement of pound/dollar since mid july and you can see that it just trade in a range within the red box.There is a fair chance that the box gets breached today/tomorrow towards the event.The upside first level to look out for is 1.3475 ( a good level to sell if you get it before the event) then comes the 38.2% fib level of #Brexit move at 1.3645 which does not look like it will test so easily unless the BoE comes out with a very hawkish statement.Currently its testing the 23.6% fib at 1.3320 level which it as been testing and rejecting for almost 4 to 5 times now.As we say the more time you knock on a door there lies a chance it opens up.The downside level to watch is 1.3050 ( see box in fig below) which has proved a tough nut to crack but as this is a central bank event the move could break all minor resistance and support easily.For now the bias is towards a weaker pound.
I will be covering the event and will come out with a write up as soon as I can soon after the event.Stay Tuned
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