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BoE Remains On Hold With A 6-3 Vote Count

By IronFX (IronFX Strategy Team)Market OverviewJun 22, 2018 06:58AM ET
www.investing.com/analysis/boe-remains-on-hold-with-a-63-vote-count-200327040
BoE Remains On Hold With A 6-3 Vote Count
By IronFX (IronFX Strategy Team)   |  Jun 22, 2018 06:58AM ET
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BoE remains on hold with a 6-3 vote count

  • BoE kept its interest rate unchanged at +0.50% yesterday, as it was widely expected. The accompanying statement provided comments regarding inflation, the GDP, household spending and the bank’s QE program. In general, the accompanying statement could be characterized as neutral to hawkish. The surprise element of the decision was that one MPC member, namely Andy Haldane, switched sides in favor for a rate hike and the vote count was 6-3, underscoring a hawkish element of the decision. Overall, the decision provided a strong support for the pound as anticipations for an August rate hike increased and we could see the pound riding that wave for a few days.
  • GBP/USD dropped in anticipation of the BoE’s interest rate decision in the early European session, breaking the 1.3125 (S2) support line. However, once the decision was announced and later on, it rose breaking consecutively the 1.3125 (S2) and the 1.3215 (S1) resistance lines (now turned to support) and then stabilizing. The pair could continue to trade in a sideways manner today, however some bullish tendencies could occur. Should the bulls take the reins we could see the pair, breaking the 1.3330 (R1) resistance line. Should the bears take over, we could see the pair breaking the 1.3215 (S1) support line and aim for the 1.3125 (S2) support level. Also the drop could have contributed to the slight weakening of the US 10-year treasury yields adding further pressure to the USD. Should the yields continue to drop we could see USD continuing to slip for the next few days.

USD weakens against major rivals

  • USD weakened against a number of other currencies yesterday and during today’s Asian morning. Analysts, cite the drop of the Philly Fed Business index yesterday, as the main reason for the USD slipping. The weak Philly index could have reinforced fears that trade wars would hurt the US economic outlook and negatively affected the mood of the market towards the greenback. Also the drop could have contributed to the slight weakening of the US 10 year treasury yields adding further pressure to the USD. Should the yields continue to drop we could see USD continuing to slip for the next few days.
  • USD/JPY dropped yesterday aiming for the 109.75 (S1) support line, reflecting the weakening of the USD. We could see the pair, trading in a sideways manner today, however bearish tendencies could occur. Should the pair come under intense selling pressure, we could see it breaking the 109.75 (S1) support line and aim for the 109.25 (S2) support barrier. Should it find buying orders along its path we could see it breaking the 110.25 (R1) resistance line and aim for the 110.75 (R2) resistance hurdle.

In today’s other economic highlights:

In the European session we get France’s final GDP growth rate for Q1 and a number of PMI’s from Germany, France and the Eurozone which could have an adverse effect on the EUR. In the American session, we get Canada’s inflation rates and retail sales data, with their forecasts providing mixed signals to the market about the Loonie. Also, please be advised that the OPEC meeting could provide increased volatility for oil prices.

GBP/USD

GBP/USD
GBP/USD

·Support: 1.3215(S1), 1.3125(S2), 1.3040(S3)
·Resistance: 1.3330(R1), 1.3425(R2), 1.3500(R3)

USD/JPY

USD/JPY
USD/JPY

·Support: 109.75(S1), 109.25(S2), 108.70(S3)
·Resistance: 110.25(R1), 110.75(R2), 111.35(R3)

BoE Remains On Hold With A 6-3 Vote Count
 

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BoE Remains On Hold With A 6-3 Vote Count

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