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Sterling awaits BoE minutes
GBP/USD is hovering above the $1.56 mark as traders look forward to finding out the voting break down from the latest BoE rate decision.
At the beginning of the month, the UK central bank kept interest rates and the bond-buying scheme unchanged at 0.5% and £375 billion respectively. Dealers are expecting all nine members to vote in favour of leaving the stimulus package unchanged. Two of the nine are expected to vote in favour of raising the interest rate, and the remaining seven are expected to be in favour of leaving rates unchanged.
As Alastair McCaig stated, low inflation in the UK is plaguing Mark Carney. Since the BoE has become more dovish is its commentary of late, a switch from one of the hawks, to a dove, could trigger a new wave of selling. If the voting breakdown comes in line with estimates I don’t foresee any major change in volatility.
The pound has made no attempt to break out of the downtrend it has been in since June, and sterling’s decline has increased following Mark Carney’s remarks last week, in which he implied a rate rise at the back end of 2015.
If the pound drops below $1.56 and the recent low of $1.5592 is cleared, then traders will be looking to $1.55. On a daily chart, sterling is oversold so a pullback could be on the cards. The 100-hour moving average of $1.5673 is the initial target, and if $1.57 is cleared, dealers will look to $1.58.