BOE on Watch
Alongside the US elections and the FOMC, we also have the November BOE meeting on Thursday to focus on. The bank is widely expected to push ahead with a further .25% rate cut. Given that the move is widely priced in, the bigger focus will instead be on the forward guidance and projections given. This is particularly true on the back of the recent, controversial UK Autumn Budget. In light of the higher taxes, borrowing and spending outlined, traders have shifted their view are now expecting some shift in the BOE’s outlook.
BOE & UK Budget
If BOE governor Bailey is seen focusing on the budget and its implications, this is likely to be taken as a less-dovish signal, causing a lower repricing of rate cut cods beyond this month. However, if Bailey downplays the impact of the budget and focuses more on recent data, this should be taken as a sign that the BOE intends to pursue further easing as outlined previously. If we hear Bailey focusing on the recent drop in services inflation in particular, this should help lead GBP lower.
Volatility Risks from US
Developments in the US this week mean that we could see outsized moves in GBPUSD depending on the Dollar volatility we get. A Trump win and a dovish BOE should see GBPUSD sharply lower by Friday. However, a Harris win and a less dovish BOE meeting should see GBPUSD rise through the end of the week.
Technical Views
GBPUSD
The sell off in GBPUSD has stalled for now into the 1.2832 level with price now attempting to get back above the broken bull trend line and the 1.30 level. Above there, 1.3136 and 1.3295 will be next resistance levels to note. Downside, 1.2832 and 1.2677 will be next support to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.