On Thursday, the Bank of England surprised markets by holding interest rates, despite hints from Governor Mark Carney that policy easing could be possible made earlier. Economists had expected a rate cut of 25 points to 0.25%, which would have been the first rate change in seven years. Following assumptions appeared after the Brexit referendum on 23 June, when Britons widely vote to leave the European Union. According to the minutes of the meeting, the Bank's Monetary Policy Committee voted by 8-1 to hold rates, as well as hinting that they "expect monetary policy to be loosened in August". Moreover, the BoE announced in its policy statement that they would give another month to evaluate the Brexit's impact on the economy and probably would raise stimulus measures in August. Currently, the bank's benchmark rate equals 0.5%. Following decision is widely appreciated by economists, since many experts are saying the Bank made the right decision by leaving interest rates unchanged.
In the meantime, the Pound advanced while shares, in turn, dropped after the Bank of England unexpected decision. The Cable added around 1.4%, or two cents, versus the dollar reaching $1.3326.
US data to drive the market
GBP/USD attempts to surge further
Yesterday the BoE unexpectedly left its interest rate unchanged, thus, boosting the British currency. Nevertheless, the Sterling was unable to stabilise above the 1.3430 mark, but still managed to overcome the immediate resistance in face of the weekly R1. Today the Cable finds itself between the weekly R1 as the nearest support and a resistance cluster, formed by the 20-day SMA and the weekly R2 around 1.3550. Another rally would cause the pair to retake the 1.3430 mark, but technical indicators are no longer giving bullish signals, suggesting that a possibility of a decline exists. The Pound now risks falling back under the 1.32 major level in wake of upcoming strong US fundamentals.
Daily chart
Hourly chart
Bulls remain in control
Bulls lost some numbers, as only 57% of traders are long the Sterling (previously 64%). The share of sell orders increased from 52 to 63%.
Compared to Wednesday, there are slightly less bulls at OANDA - they take up 52% 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 (65%) 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 between 1.24 and 1.26 dollars in three months, chosen by 11% of the surveyed. At the same time, the mean forecast for Oct 15 is 1.3638.