GBP Relief Rally Struggles Ahead of BoE; Bearish RSI Trigger Unfolds

Bank of England (BoE) to Keep Benchmark Interest Rate during 0.25%, QE Program during GBP 435B.

Will BoE Officials Show Greater Concerns for Above-Target Inflation?

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Trading a News: Bank of England (BoE) Interest Rate Decision

Even yet a Bank of England (BoE) is widely approaching to keep a stream process during a final interest-rate preference for 2016, hawkish tongue from Governor Mark Carney and Co. might beget a incomparable service convene in GBP/USD as executive bank officials advise ‘there are boundary to a border to that above-target acceleration can be tolerated.’

What’s Expected:

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Why Is This Event Important:

The Monetary Policy Committee (MPC) is approaching to validate a wait-and-see proceed going into 2017 as new ‘data advise that a near-term opinion for activity is stronger than approaching 3 months ago,’ and a executive bank might continue to speak down expectations for additional financial support as officials design acceleration to surpass a 2% aim over a process horizon. Nevertheless, some-more of a same from a BoE might lead to a muted greeting generally as a U.K.’s depart from a European Union (EU) clouds a opinion for enlargement and inflation.

Expectations: Bullish Argument/Scenario

Stronger expenditure accompanied by a pickup in cost enlargement might pull a BoE to adopt a some-more hawkish tinge forward of 2017, and a British Pound might serve replenish a waste following a U.K. Referendum in Jun should a executive bank continue to change a balance over a entrance months.

Risk: Bearish Argument/Scenario

However, a BoE might expel a some-more discreet opinion this time around amid easing pursuit enlargement interconnected with negligence outputs, and GBP/USD might onslaught to keep a miscarry following a British Pound ‘flash crash’ should a uninformed comments drag on seductiveness rate expectations.

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How To Trade This Event Risk(Video)

Bullish GBP Trade: MPC Becomes Increasingly Concerned of ‘Inflation Overshoot’

  • Need green, five-minute candle following a rate-decision to cruise a prolonged GBP/USD position.
  • If marketplace greeting favors a prolonged argent trade, buy GBP/USD with dual apart position.
  • Set stop during a near-by pitch low/reasonable stretch from entry; demeanour for during slightest 1:1 risk-to-reward.
  • Move stop to entrance on remaining position once initial aim is hit, set reasonable limit.

Bearish GBP Trade: BoE Keeps a Door Open to Further Support U.K. Economy

  • Need red, five-minute candle to preference a brief GBP/USD trade.
  • Implement same setup as a bullish British Pound trade, only in reverse.

Potential Price Targets For The Release


GBP/USD Daily Chart

Chart – Created Using Trading View

  • Following a market greeting to a FOMC seductiveness rate decision, GBP/USD might continue to prune a miscarry following a British Pound ‘flash crash’ as a sell rate threatens a ceiling trending channel carried over from October, with a Relative Strength Index (RSI) highlighting a identical dynamic; break/close subsequent a Fibonacci overlie around 1.2460 (61.8% expansion) to 1.2500 (38.2% retracement) opens adult a subsequent downside aim around 1.2370 (50% expansion) followed by 1.2270 (23.6% retracement).
  • Interim Resistance: 1.2920 (100% expansion) to 1.2950 (23.6% expansion)
  • Interim Support: 1.1905 (2016-low) and 1.2100 (61.8% expansion)

Impact that a BoE Interest Rate Decision has had on GBP during a final meeting

November 2016 Bank of England Interest Rate Decision

GBP/USD 5-Minute


Chart – Created Using Trading View

The Bank of England (BoE) kept a benchmark seductiveness rate on reason during 0.25% while progressing a asset-purchase module during GBP 435B, and a executive bank appears to be in no rush to serve embark on a easing-cycle as Governor Mark Carney and Co. advise ‘monetary process can respond, in possibly direction, to changes to a mercantile opinion as they reveal to safeguard a tolerable lapse of acceleration to a 2% target.’ The new comments advise a Monetary Policy Committee (MPC) will lift a stream process into 2017 as U.K. cost enlargement is approaching ‘to arise to a rate above a 2% target, for an extended period, as a outcome of a debasement of argent that had accompanied a referendum result,’ and a executive bank might continue to speak down expectations for additional financial support as ‘there are boundary to a border to that above-target acceleration can be tolerated.’ The change in executive bank tongue propped adult a British Pound, with GBP/USD advancing from 1.2422 to finish a day during 1.2459.

Get the tip trade opportunities of 2016 HERE

Read More:

Gold Trades to New Lows, Silver Stays Stubbornly Strong

USD/CAD Technical Analysis: CAD Building Momentum Into LT Support

Technical Focus: EUR/USD – How Does this End?

GBP/USD Weakness to Be Viewed as Opportunity

— Written by David Song, Currency Analyst

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