BoE’s interest rate decision in the spotlight

In today’s European session, the BoE’s interest rate decision is expected to steal the spotlight, following yesterday’s CPI print coming in higher than expected at 7.1%, reaching 30-year highs. As a result, we highlight the two predominant possibilities assumed by analysts, which is for the bank to hike interest rates by 25 or 50 basis points. Furthermore, we note the Turkish central bank interest rate decisions today where it is anticipated by analysts that the bank will have no option but to hike. Yet, considering President Erdogan’s decision to raise the minimum wage by 34% yesterday, could contradict in the long run an attempt to hike interest rates in order to combat the rampant inflationary pressures in the Turkish economy. In Yesterday’ American session, we note the testimony of Fed Chair Powell before the US House of Representatives, stating that “Inflation remains well above our longer-run goal of 2 percent” with nearly all FOMC participants expecting that it will be appropriate to raise interest rates further by the end of the year. The statements made by Fed Chair Powell, continue hinting that the bank will continue its aggressive interest rate policy. In the US stock markets we note the complaint by the Federal Trade Commission that Amazon lured and tricked customers into enrolling into its service Amazon Prime using “manipulative, coercive, or deceptive user interface designs”. The precious metal seems to have slightly lost some ground, as US Treasury Yields rise, highlighting once again, their inverse relationship.

GBP/USD appears to be moving in an upwards fashion, following Tuesday’s CPI print coming in higher than expected. We maintain a bullish outlook for the pair and supporting our case is the upwards moving trendline incepted on the 5^th of June. For our bullish outlook to continue, we would like to see a clear break above the 1.2830 (R1) resistance level with the next possible target for the bulls being the 1.925 (R2) resistance ceiling. For a bearish outlook, we would like to see a clear break below the 1.2695 (S1) support level, with the next possible target for the bears being the 1.2590 (S2) support level. However, we note that the Bollinger bands have narrowed, implying low market volatility, in addition to the RSI indicator currently near the reading of 50 which implies a neutral market sentiment.

EUR/USD appears be moving in an upwards fashion, having broken above resistance now turned support at the 1.0940 (S1) support level. We maintain a bullish outlook for the pair and supporting our case is the RSI indicator below our 4-Hour chart, which broke above the reading of 70 , implying a strong bullish market sentiment in addition to our upwards moving trendline, which was incepted on the 6^th of June. For our bullish outlook to continue, we would like to see a clear break above the 1.1025 (R1) resistance level, with the next possible target for the bulls being the 1.1090 (R2) resistance barrier. On the other hand, for a bearish outlook we would like to see a clear break below support at the 1.0940 (S1) level , with the next possible target for the bears being the 1.0865 (S2) support base.

Other highlights for the day:

During today’s European session we note France’s Manufacturing Business Climate figure for June. In the American session we note the weekly initial jobless claims figure, the Eurozone’s Preliminary consumer confidence figure for June, the US Existing Home sales figure and the US EIA Weekly crude oil stock figure. In tomorrow’s Asian session, we highlight Australia’s Preliminary Judo Bank manufacturing PMI figure and the UK’s GfK consumer confidence figure, both for June followed by Japan’s CPI rates for May and Japan’s Preliminary JibunkBK Manufacturing PMI figure for June. On a monetary level, we note the SNB’s, Norway’s central bank and the BoE’s, CBT’s interest rate decisions and the speeches by Fed Board Governor Waller, ECB’s Panetta, Fed Governor Bowman, Fed Chair Powell’s testimony before the US Senate, Cleveland Fed President Mester, ECB Vice President De Guindos and lastly Richmond Fed President Barkin.

GBP/USD H4 Chart

Support: 1.2695 (S1), 1.2590 (S2), 1.2440 (S3)

Resistance: 1.2830 (R1),  1.2925 (R2), 1.3040 (R3)

EUR/USD H4 Chart

Support: 1.0940 (S1), 1.0865 (S2), 1.0785 (S3)

Resistance: 1.1025 (R1), 1.1090 (R2), 1.1170 (R3)

If you have any general queries or comments relating to this article please send an email directly to our Research team at research_team@ironfx.com

إخلاء المسؤولية:
لا تُعد هذه المعلومات نصيحة استثمارية أو توصية بالاستثمار، وإنما تُعد تواصلاً تسويقيًا. لا تتحمل IronFX أي مسؤولية عن أي بيانات أو معلومات مقدمة من أطراف ثالثة تم الإشارة إليها أو الارتباط بها في هذا التواصل.