Sterling in the firing line with BOE meeting today

Bank of England

How Do We Make Money Today?

The USD had a pretty good yesterday and it was on the back of stable equity markets and weakness in Euro & Sterling.

The Euro dropped on disappointment over reports that the leader of Germany’s Social Democrats (SPD), Martin Schulz, would not be taking over as finance minister for Europe’s biggest economy.

Sterling dropped like a lead balloon after a document showed on Tuesday that the European Union wants the power to restrict British access to the single market during a transition period after Britain leaves the bloc, as a way to punish London if it violates agreed rules.

Two big negatives that gave the USD Index a bigh push higher.

A much truer reflection of what the USD is doing can be seen on the USDJPY. It’s slowly regained levels it was trading pre-equity meltdown. So really there’s not a lot going on at the moment on the USD.

Today all eyes are on the BOE announcements.

Once again all the media outlets are pumping it up as ‘Super Thursday’. It’s big but let’s be honest it’s not the ‘superbowl’ every time the BOE has a meeting.

Now this is going to be tricky for certain & I’d almost recommend to everyone, let the meeting go by and then start trading after it. There will be extreme volatility and potential wild moves both sides on the releases.

Direction for GBP will come from the BOE Statement. The BOE Gov Carney has already told the market they are going to fight inflation (which has been coming in strong) whilst recent data suggests the market is cooling somewhat.

So if they’re going to tackle inflation the Statement needs to be hawkish on future rate expectations.

If they hawkish we should see it move higher but because this is already forecast it may not go far….unless they are aggressive and more specific about how many rate hikes they expect to make in 2018, and then it’ll shoot higher.

Also if there is a move on th vote counts – towards triming QE or raising rates then that will be additional hawkish signals.

If they are neutral well then GBP will come off pretty hard. The problem is we have no specific entry levels on the downsiode and that makes the trading opportunity tricky.

Topside we have resistance to play with and that’s enough for me to put a cheeky break trade on.

The smart thing to do is go through all the GBP crosses and isolate the pairs with the best technical set ups!

Trading Pairs to Focus On

GBPUSD & GBPJPY

Check our Next Best Trades list for full details as to why these pairs are in focus.

Technical Set Up – What’s Happening with the Majors

Check our Daily Analysis for detailed analysis of the Major currency pairs.

Today’s Fundamental Drivers

Plan the Trade, Trade the Plan!

The idea of our “Market Insight” is to give you some guidance into your daily preparation.

Make sure you don’t waste unnecessary time in front of the screens.

Remember you need to be fresh, confident and ready to trade and by sitting aimlessly in front of your screens you will become stale and uncertain.

The key to your sucess: Isolate the opportunities that work for you and focus on them.

Don’t worry about things that you can’t make…..chasing them will only cause problems (tiredness & irrational behaviour will take over).

Tune up your charts & get ready to trade…..see you in the 247 Trade Zone!

Brad

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