After the Fed confirmed its dovish shift yesterday, the Bank of England has a so-called Super Thursday today. The pound is rising for the third day in a row, challenging the 1.27 level ahead of the key event. The main driver behind the bullish tone in the pair is dollar weakness due to a softer Federal Reserve rhetoric and better risk sentiment amid positive signals from the US-China trade front.
The Bank of England is widely expected to keep interest rates on hold. At the same time, despite the lingering uncertainty over Brexit, the central bank could indicate a possible increase later this year, citing wages that are growing at the fastest pace in a decade and inflation expectations that have risen substantially.
On the other hand, after dovishness from Draghi and Powell, Carney will hardly express a clear hawkish tone amid a threat of a global recession. Nevertheless, GBP/USD could extend gains after the meeting in contrast to the obviously softer tone from the two other major central banks. As such, the cable may rise to the 1.2765 area, a break of which will open the way to 1.28. The uncertainty around Brexit could cap the pair’s bullishness.