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Australia and China’s trade balance numbers got traders taking risks during the Asian session.

But focus could turn to GBP and USD in the next few hours as BOE publishes its policy statement and Uncle Sam prints a weekly labor market number.

Before we discuss GBP/USD’s potential setup, here are the top headlines that rocked the markets during the Asian session:

Currency Snapshot

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Economic Calendar:

  • Switzerland’s unemployment rate at 5:30 am GMT
  • Germany’s industrial production at 6:00 am GMT
  • BOE’s policy announcement at 6:00 am GMT
  • U.K. Halifax house price index at 7:30 am GMT
  • BOE Governor Andrew Bailey to give a speech at 9:00 am GMT
  • Weekly U.S. unemployment claims at 12:30 pm GMT

What to Watch: GBP/USD

GBP/USD 1-hour Forex Chart
GBP/USD 1-hour Forex Chart

A few heartbeats ago, we learned that Bank of England (BOE) members have kept their interest rates and asset purchases plans unchanged in May.

What markets didn’t expect was for TWO members to vote for a £100 billion increase in their bond purchasing program.

We’ll know more about BOE’s plans as the freshly-minted (ha!) Governor Andrew Bailey holds a presser at 9:00 am GMT. Look out for clues on the central bank’s growth forecasts, how and how fast it expects the economy to “reopen,” and any immediate plans that might affect GBP’s prices.

Meanwhile, Uncle Sam is set to print its weekly initial jobless claims figure. It’s expected to add another 3 million claimants and bring the total of new unemployed workers to a whopping 33.3 million in the last six weeks. Yikes!

GBP/USD is sitting on an interesting support level and looks ready to bounce after BOE’s announcement.

If Bailey projects confidence in his presser, or if the weekly jobless claims data prints lower than expected, then we could see the pound bounce to its mid-range levels near 1.2450. GBP/USD volatility analysis tells us that this move is possible.

If Bailey adopts a cautious stance in his estimates, however, or if today’s jobless data inspires another round of risk aversion, then GBP/USD could break below its April range support and retest areas of interest near 1.2200.