BOE recap: Rates unchanged, for now

The Bank of England left rates unchanged at 0.1% by a vote of 7-2 as Ramsden and Saunders voted for a 15bp hike. As discussed in our BOE Preview, some had expected a possible rate hike based on recent officials’ comments, especially from BOE Governor Bailey. A 15bp hike was priced into the market. The committee also voted 6-3 to keep its bond purchase program unchanged at GBP 895 billion. However, the statement noted that it will be necessary to raise rates over coming months if data, especially jobs, is in line with forecasts. There has not been a UK jobs report since the furlough program ended on September 30^th. They also noted that inflation is expected to peak at 4.8% in Q2 2022, as opposed to the previous forecast of 4.02% in Q1 2022.

Everything you need to know about the Bank of England

In the press conference, Bailey noted that monetary policy can do little to affect near-term inflation and must focus on the medium-term, in which the inflation remains well anchored. He also noted that the labor market remains highly uncertain given the end of the furlough program. And he cautioned on the scale of rate bets seen in the markets, which seems a bit odd, given that he said a few weeks back that the central bank will act if supply side inflation (energy) gets too high.

Trade GBP/USD now: Login or open a new account!

GBP/USD sold off aggressively following the release of the statement. The pair moved from 1.3637 immediately down to 1.3554. Thus far, the low of the day is 1.3521, down over 1.1%.

Source: Tradingview, Stone X

On a daily timeframe, GBP/USD began moving lower in earnest on October 29^th as month-end buying of the US Dollar hit the markets. At the time, the pair was up against resistance at a downward sloping trendline near 1.3800 dating back to July 29^th. Today, the GBP/USD couldn’t trade above the 50-Day Moving Average at 1.3702 before falling to lows just above horizontal support at 1.3519. Below there is ta confluence of support between the 50% retracement from the lows of September 23^rd, 2020 and the highs from June 1^st at 1.3459 and lows of September 29^th at 1.3411. Resistance is at the previously mentioned 50 Day Moving Average, then the downward sloping trendline, which is still near 1.3800. Above the trendline, resistance is at the 200 Day Moving Average at 1.3846 (which capped the rally in late October).

Source: Tradingview, Stone X

The Bank of England made a strong case today for them to leave interest rates on hold, which included jobs uncertainty due to the end of the furlough program and a focus on inflation in the medium-term, which they expect to peak at 4.8% in Q2 2022. However, if the jobs data comes in as forecast (i.e. after the end of the program), rates may increase. These are all comments you would expect from a central bank. However, markets were disappointed as the comments leading up to the meeting indicated a hike was possible. Maybe next time, Baily will choose his words more wisely when commenting ahead of a central bank meeting!

Learn more about forex trading opportunities.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.