The Bank of England’s Monetary Policy Committee is almost certain to keep interest rates unchanged today despite inflation rising well above its 2% target.
Today’s going to be a quieter session in terms of economic news, ahead of key events later this week. There are however at least three factors that need to be watched closely.
Economic data out of the UK released in the last couple of days has been pound-positive, yet the GBPUSD is still holding below the 1.30 handle. But for how long? Given that the positively-correlating EURUSD pair has already broken well above its own corresponding psychological hurdle at 1.10 after a sharp rally, the cable could be playing catch up.
After a 300-pip rally on Tuesday, the GBPUSD is unsurprisingly taking a breather today. Tuesday’s upsurge came on the back of news Theresa May called for a snap general election.
Financial markets opened in a bit of a panic mode overnight in the wake of Trump’s failure to repeal Obamacare. Stock index futures slumped while the dollar index fell to its lowest since mid-November as the yen and euro both gapped higher. The dollar’s losses steepened after the London open as the GBP/USD climbed to near 1.26 handle and EUR/USD neared 1.0900. European stock indices bounced off their lows slightly.
China’s economic growth may continue to slow in 2017 to 6.5 percent before possibly bottoming out in 2018, a new report showed Monday.
Forget the Bank of England meeting today, it is all about politics as far as the pound is concerned.
As we highlighted the possibility on Monday, gold took a big plunge below the psychologically-important and support level of $1300 per ounce yesterday. The breakdown triggered further follow-up technical selling, causing gold to fall for a time below $1270 per ounce.
The dollar has staged a broad-based rally today, which caused the GBP/USD to tumble to a new 31-year low and the EUR/USD momentarily dipped below its 200-day moving average once again.
The metronomic price action for gold is continuing to play out once again on the daily chart, with the rally of late September starting to wane once again, as the precious metal descends once more to test the all important technical support area in the $1308 per ounce region in early trading.