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All Eyes on the BoE

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On Wednesday, US dollar rose, recovering from its lowest level in six weeks, as traders squared positions ahead of Friday's US Non-farm Payrolls report, which is expected to shed more light on the timing of the next interest rate rise. USD had been on its best run of weekly gains in a year and a half until last week, when the Fed disappointed traders who had hoped the US central bank would clearly signal a near-term rate hike.

The US dollar index settled above 95.50, as private companies added 197k positions in July that was a slight increase from June.

The BoE could cut its interest rates to a record low 0.25%. However, the question is, will the BoE resume its multibillion-pound quantitative easing programme of government bond purchases or not?

GBP declined to $1.33 in anticipation of the BoE meeting today. From a technical point of view, Cable could decline to $1.30 during the course of the day. 

Euro declined to $1.1150 vs. USD during yesterday’s trading session, negatively affected by strong USD. From a technical point of view, the fiber could decline to $1.11.

Gold prices settled below $1,360 yesterday, negatively affected by profit-taking and strong USD.

Oil prices rose unexpectedly by 3% yesterday and US crude prices settled above $40 a barrel again, after US government data reported a larger than expected gasoline inventories decline.

On Wednesday, the Energy Information Administration reported that the crude inventories rose by 1.4 million barrels in the last week, compared with analysts' expectations for a cut of 1.4 million barrels. On the other hand, gasoline stocks declined by 3.3 million barrels, compared with forecasts for a 200k-barrel decrease.

The most important economic events:

  • GBP Bank of England Rate Decision (AUG 4): (GMT 13:00) Important – Forecast (0.25%) – Previous (0.50%).
  • GBP BOE Asset Purchase Target (AUG): (GMT 13:00) Important – Forecast (375b) – Previous (375b).
  • GBP Bank of England Inflation Report: (GMT 13:00) Important.

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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