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It’s been a day since the BOE dropped its policy announcements.

Will today’s headlines undo yesterday’s GBP/USD price action?

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Economic Calendar:

  • Germany’s IfO business climate at 8:00 am GMT
  • U.K.’s CBI realized sales at 10:00 pm GMT
  • Fed Chairman Powel to deliver opening remarks at a Fed event at 2:00 pm GMT
  • U.S. new home sales at 2:00 pm GMT

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: GBP/USD

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

Just yesterday we talked about watching GBP/USD for its reaction to the Bank of England (BOE’s) monetary policy announcements.

Turned out, Governor Andrew Bailey and his team thought that prices would stay higher than they had anticipated. This means more pressure raise their interest rates! But a rate hike doesn’t mean that the economy is recovering well. In fact, BOE members recently downgraded their economic forecasts.

It also doesn’t help that the U.K. may see petrol shortages (and therefore higher prices for consumer goods) at a time when consumers are already worried about their spending abilities.

Worries about the BOE taking liquidity away too soon could drag GBP/USD, which has already encountered resistance near a broken range support, the 38.2% Fib pullback of a recent downswing, and the 1.3750 minor psychological level.

If U.S. session traders feed off of Evegrande (and risk-taking) concerns from the Asian session, or if more traders price in the Fed’s tapering, then GBP/USD could dip back to its monthly lows.

But if traders take on more risks today, or if we see an end-of-week selling situation for the Greenback, then GBP/USD could pop back above its broken range support and head for the 1.3800 area of interest.