When is the BOE interest rate decision and how could it affect GBP/USD?

BOE interest rate decision overview

It’s a ‘Super Thursday’ again and time for the Bank of England’s (BOE) second rate hike announcement due at 1200GMT, the first back-to-back lift-off since 2004. The interest rate decision will be accompanied by the release of the Monetary Policy Report (MPR) and the minutes of the policy meeting. Governor Andrew Bailey is scheduled to hold a post-monetary policy decision press conference at 1230GMT.

The BOE is widely expected to raise the benchmark bank rate by 25 bps to 0.50% from 0.25% previous, with an 8-1 voting composition likely in favor of a rate lift-off. Money markets have already priced in a 25 bps rate hike for this month, as Bailey and Co. remain committed to fighting the inflation monster.

The economic indicators continue to back a hawkish move from the BOE, as the “UK Gross Domestic Product surprised with 0.9% growth in November, the unemployment rate dropped to 4.1% in November and inflation exceeded estimates with 5.4% in December,” FXStreet’s Senior Analyst Yohay Elam notes.

How could it affect GBP/USD?

The BOE needs much more than a quarter percentage point rate increase to extend the ongoing uptrend in the pound. Traders will watch out for Bailey’s presser for fresh hints on future rate hikes and the central bank’s plans to squeeze the balance sheet. A more hawkish tilt could drive GBP/USD past the 1.3600 round level. On the other hand, the pair could witness a ‘sell the fact’ trade should the UK’s central bank deliver a dovish hike. Additionally, the quarterly estimates of the Kingdom’s growth and inflation could also have a significant impact on GBP valuations.

Haresh Menghani, Editor at FXStreet, has outlined important technical levels to trade the major: “The recent move up witnessed over the past one week or so stalled just ahead of the 61.8% Fibonacci retracement level of the 1.3749-1.3358 downfall. A convincing breakthrough of the aforementioned barrier, around the 1.3600 mark, will set the stage for a further near-term appreciating move. The pair would then accelerate the momentum towards an intermediate hurdle near the 1.3660 area before eventually aiming to reclaim the 1.3700 mark.”

“Any meaningful pullback might find decent support and attract fresh buying near the 38.2% Fibo. level, around the 1.3500 psychological mark. The sustained weakness below might prompt some technical selling and drag the pair towards the 23.6% Fibo. level, around mid-1.3400s,” Haresh added.

Key notes

About the BOE interest rate decision

The BOE Interest Rate Decision is announced by the Bank of England. If the BOE is hawkish about the inflationary outlook of the economy and raises its benchmark lending rate it is positive, or bullish, for the GBP. Likewise, if the BOE has a dovish view on the UK economy and keeps the ongoing benchmark rate the same or cuts the rate it is seen as negative, or bearish.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.