Hawkish Expectations
Expectations into today’s BOE meeting are skewed firmly to the upside. The UK fundamental backdrop is improving sharply and, despite the current delay in lockdown, the market is expecting a positive message from the BOE today. The main focus will be on the bank’s outlook regarding inflation and tapering. If the BOE signals that tapering is likely to begin this year as a result of the rise in inflation, GBP is likely to be well bid on the back of this. The extent to which GBP rallies will depend entirely on the scale of the BOE’s message. While the BOE has been keen to downplay inflationary risks, dissent has been growing within the camp, suggesting that inflation might be better addressed today. If this is the case, GBP longs will be the main focus. Alternatively, any correction lower on any disappointment today should simply provide an opportunity to buy at better levels.
Where to Trade the June BOE Meeting?
With the SNB having recently reaffirmed its commitment to maintaining easing, any hawkish tilt from the BOE today should provide a healthy dose of policy divergence, creating room for upside in GBPCHF. GBPCHF is currently looking to break out above the long term bearish trend line once again. If price clears 1.2824 today, 1.2987 is the first target for bulls.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.