The Bank of England left its monetary policy unchanged at its March meeting on Thursday. Eight of nine policymakers voted to keep the key interest rate at the record low level of 0.25%. Kristin Forbes, who is due to leave the BoE in June, cast the sole vote in favour of raising interest rates to 0.50%, adding that she was feeling uncomfortable keeping interest rates on hold. According to her, the post-Brexit economic slowdown has not materialised yet. Analysts suggest that the key policy rate will remain unchanged until the Brexit situation becomes clearer. All of the BoE's officials voted anonymously to maintain the asset-buying plan at 435 billion pounds, as markets expected. At the meeting, policymakers stated that slow wage growth and rising inflation, driven by the sharp fall in the value of the Pound, started to put downward pressure on British consumers.
Earlier this week, the ONS reported that wage growth fell to 2.2% during the three-month period to January. This drop called into question the BoE's 2017 wage growth forecast of 3%. The BoE also said that it could tolerate a quicker pace of price rises, following a decade of below-target inflation. After the release, the Pound rose to 1.1518 against the Euro and 1.2363 against the US Dollar.
UK CPI is the main data today
GBP/USD still unable to reclaim 1.24
On Monday, the GBP/USD currency pair experienced a small bearish correction, after having surged for three consecutive days last week. The situation mostly remains unchanged, with the exception of the immediate resistance area now being slightly stronger, as the 55-day SMA is now bolstering the 100-day one. However, technical studies are now giving bearish signals in the daily timeframe, suggesting that Cable could struggle to appreciate again. Ultimately, the Pound is required to stabilise above the 1.24 level in order to reach the nine-month down-trend. In case bears take over the market, the 1.23 mark is expected to hold, as it is reinforced by the weekly PP and the 20-day SMA.
Daily chart
Hourly chart
Traders mostly bullish
Today 67% of traders holding long positions (previously 68%), whereas pending orders are still equally divided between buy and sell ones.
A slightly less optimistic situation is observed elsewhere. For example, 55% of positions open at OANDA are currently long. This is more than the share of shorts (45%), barely sufficient for the sentiment to be called bullish. Meanwhile, sentiment at Saxo Bank is also bullish, with 59% of traders now being long and the other 41% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders still indecisive
By the end of the next three months traders expect the Cable to fall under the 1.22 major level, as 55% of survey participants believe so. While the current price is around 1.23, the average forecast for June 21 is 1.225. The 1.14-1.16 and the 1.20-1.22 ranges are now the most popular price intervals, both having 14% of the votes, while on the second place is the 1.30-1.32 price range, with 13% of poll participants choosing it. Furthermore, the 1.16-1.18 and the 1.28-1.30 intervals were each chosen by 11% of the voters.