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All Attention turns to the Bank Of England

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The pound fell on Wednesday after achieving strong gains over two days as the Bank of England could cut interest rates today. GBP strongly recovered in the last two trading sessions, positively affected by Theresa May's coronation.

The Bank of England began a two-day monetary policy meeting on Wednesday. The UK voted to leave the European Union in a referendum last month, Mark Carney has already signaled the central bank’s action to prop up Britain’s economy.

The BoE is likely to slash its benchmark interest rate by 25 basis points (bps) to 0.25%; on the other hand, it could expand the size of its asset purchase program at 375 billion. From a technical point of view, Cable could touch $1.30 once again, if the BoE adopted strong actions to prevent the economy from slipping into recession.

The U.S. dollar index fell by 28 pips and traded at 96.28.

USD declined by 0.5% vs. Japanese Yen and traded at ¥104.

Gold settled during yesterday’s trading session and traded at $1,340, as markets awaited stimulus from the UK’s policy makers. The BoE’s decisions could push the yellow metal to touch $1,360.  

Oil prices declined once again after the U.S. reported a smaller-than-expected crude inventory draw for last week. It traded below $45 and could decline further by the end of the week.

The most important economic events:

  • GBP Bank of England Rate Decision (JUL 14): (GMT 13:00) – Important – Forecast (0.25%) – Previous (0.50%).
  • GBP BOE Asset Purchase Target (JUL): (GMT 13:00) – Important – Forecast (375b) – Previous (375b).
  • USD Initial Jobless Claims (JUL 9): (GMT 14:30) – Medium – Forecast (265k) – Previous (254k).
  • USD Continuing Claims (JUL 2): (GMT 14:30) – Medium – Forecast (2140k) – Previous (2124k).

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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