According to the Mark Carney, criticism towards the Bank of England in the run-up to the EU referendum had been "extraordinary in all senses of the word". For the first time in more than seven years, economists are finally expecting some action from the Bank of England towards the UK interest rates during its first meeting after the Brexit referendum on Thursday. It is expected, that in order to calm financial markets and spur confidence after the Britons voted to leave the European Union, the central bank is widely seen to reduce its key interest rate to 0.25% from a current record low of 0.5%, where it has stood since March 2009. Currently, the BOE, is trying to find a balance of addressing the potential economic impact of a Brexit, without seen as siding with either political position. Philip Shaw, chief economist at Investec adds "Carney alluded to a range of available policy options, some of which were not used previously. We are at pains to identify exactly what the Governor might have in mind here. Dropping cash from helicopters (or a practical equivalent), has been ruled out by several central banks and we do not see this as a realistic possibility".
Meanwhile, the BOE rate decision and minutes are going to be announced on Thursday.
Another quiet day today
GBP/USD attempts to establish a fresh one-week high
The Sterling almost fully erased previous week's losses yesterday, but the second resistance level, namely the weekly R1, limited the gains. Today the weekly R1 acts as the immediate resistance, which could reverse the bullish momentum, causing the British Pound to return to the weekly PP at 1.3033, as technical indicators in the daily and the weekly timeframes suggest. On the other hand, we could see another rally take place ahead of the BoE's interest rate decision tomorrow, when the Cable is expected to weaken substantially. Further gains are unlikely to exceed the 1.3430 area, despite the second nearest resistance located around the 1.36 mark.
Daily chart
Hourly chart
Bulls remain in control
There are 60% of traders with a positive outlook towards the Cable today, while the share of sell orders remains unchanged at 74%.
Compared to Wednesday, there are slightly less bulls at OANDA - they take up 54% of the positions open with the Canada-based broker. Sentiment at Saxo Bank grew stronger, as here the number of bulls exceeds the number of bears by 6 percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.40 in three months
More than half of traders (61%) believe the British currency is to cost 1.40 or less dollars after a three-month period. The most popular price intervals was selected by only 14% of the voters, namely the 1.28-1.30 one, while the second most popular choice implies that the Sterling is to cost either between 1.24 and 1.26 or between 1.40 and 1.42 dollars in three months, both chosen by 10% of the surveyed. At the same time, the mean forecast for Oct 13 is 1.3698.