British Pound (GBP) Latest: Next GBP/USD Move Depends on Bank of England

GBP/USD ON BANK OF ENGLAND WATCH

The Bank of England is all but certain to keep its benchmark Bank Rate at 0.1% today but traders in GBP/USD, the Sterling crosses, the FTSE 100 index and Gilts need to keep a close eye on the central bank’s decision on asset purchases.

The consensus view is that it will increase its quantitative easing (QE) program to £745 billion from £645 billion to counter the damage to the UK economy caused by the coronavirus pandemic. However, there is a chance that the increase could be as high as £200 billion rather than £100 billion.

In normal times, a larger than expected easing of monetary policy would likely send GBP lower. Now, though, it would likely be welcomed as another sign that central banks are willing to take decisive action to help economic growth recover. Ahead of these decisions, GBP/USD is trading in a narrow range around 1.2550 after its recent slide lower.

GBP/USD PRICE CHART, ONE-HOUR TIMEFRAME (JUNE 10-18, 2020)

Chart by IG (You can click on it for a larger image)

You can watch a live webinar on the Bank’s decisions hosted by my colleague Justin McQueen at 1045 GMT/1145 BST by registering here

The Bank’s monetary policy committee will announce its decisions at 1100 GMT/1200 BST against a broadly negative backdrop as fears grow of a second wave of coronavirus infections. After rises in infections in the US and China, evidence is increasing that cases rise when lockdowns are lifted. That has led to another flow of funds into safe havens such as the US Dollar, the Japanese Yen and US Treasury bonds, and out of stocks, the Euro and crude oil.

Stocks in particular have eased over the last 24 hours, with the FTSE 100 index of leading London-listed stocks down around 0.4% in early London trading Thursday. Sentiment has been dented too by news that the Australian unemployment rate climbed to a 19-year high in May, sending the Australian Dollar lower.

Reprinted from dailyfx.com, the copyright all reserved by the original author.