Sterling eyes BoE minutes
GBP/USD is trading in the $1.4750 region, and today is an important trading session for the currency pair as the updates from the Bank of England and the Federal Reserve will inject some much needed volatility.
The steep downward trend that GBP/USD has been in since the end of last month isn’t showing any signs of a correction, and it is on the verge of the next move lower should the BoE minutes at 9.30am (London time) lean towards a dovish stance.
The market is expecting all nine members to vote in favour of keeping rates on hold, but Mark Carney has recently stated he would cut rates if necessary. Inflation in the UK is low and it is in danger of sliding into negative territory. If this occurs it would renew a round of selling in the currency pair.
The pound’s problems are compounded by the strength of the dollar, and if the Fed removes the word ‘patience’ from its statement traders will push to the conclusion that the US will raise rates in June, subsequently pushing the pound lower.
The downside target for GBP/USD is $1.47, and if that level is punctured traders will look to $1.46. The $1.48 level is the initial target to the upside and then the resistance at $1.4845 will be in sight.