The Bank of England will announce its rate decision today. The market does not expect a change in either 0.25% policy rate or 435 bln GBP bond buying program however a surprising revision would lead to a volatility in GBP/USD. The BoE also monthly inflation and employment reports will be published this week, It might show us some fluctuation in GBP/USD pair after inflation report and rate decision.
In Turkey, the CBRT will hold its monetary policy council meeting, There is no market consensus regarding rate hike however the Bank should continue to have the tight monetary policy until the upside risks are over on inflation view. Late liquidity window rate is currently at 12.25%. There is no rate change expectation in neither marginal lending rate at 9.25% nor one-week repo rate at 8.0%. Any surprising revision would lead to a volatility in USD/TRY.
We will follow the US CPI Inflation data today. As inflation is one of the two pillars of the Fed’s dual mandate, the market will seek a hint from the next Fed moves. Although, traders price out another Fed Rate Hike this year, economic data may nevertheless provide some support to the dollar. The US CPI is expected to come out 0.3% m/m and y/y inflation is expected to rise slightly to 1.8% in August from 1.7% a month ago.
Core inflation, on the other hand, is expected to ease to 1.6% from 1.7% a month earlier. Acceleration in headline inflation may prompt investors to price further rate hikes from the Fed, hence push DXY and bond yields higher. Conversely, a worse than expected realization would soothe market concerns and support EM economies.
Technical Analysis:
The EUR/USD pair showed a downward movement yesterday and the price dropped to the key support level of 1.1884. Ahead of the US CPI data, if the pullback continues below 1.1884, we will follow a daily support level at 1.1812. On the other hand, if the price rises above 1.1884, we will face the resistance level at 1.1968.
Support: 1.1884- 1.1812 – 1.1769
Resistance: 1.1968 - 1.2053
The GBP/USD pair showed a profit taking action yesterday. Ahead of The BoE Interest Rate Decision, the GBP/USD pair is trading above the 1.3199 support level. In the event that the pullbacks continue 1.3199, the next support level will be at 1.3152. On the other hand, If the price shows upward movement, we will follow again the daily resistance level at 1.3242. Moreover, In order for the bullish action gain more momentum, it needs to rise and remain above 1.3241 on a daily basis.
Support: 1.3199 – 1.3152 – 1.3103
Resistance: 1.3241
The USD/TRY currency found buyers from the key support level of 3.4464 last Monday. The price has increased since that time. In the event that the upward movement continues, we will face 3.4812 and 3.5128. On the other hand, if the price drops below 3.4464, the next support level will be at 3.4044.
Support: 3.4464 - 3. 4044 - 3.3368
Resistance : 3.4812 – 3.5127 – 3.5293
The gold price profit taking action continues. In the event that the pullback continues, we will follow the daily support level of 1307. However, as long as the price remains above 1307 on a daily basis, the bullish action is most likely dominate. On the other hand, if the price rises, the daily resistance level will be at 1367
Support: 1307 – 1291 – 1283
Resistance: 1367