The British pound is on target today to rack up its 6th straight day of gains as fears over Brexit subside and some predict that interest rates and policy statements will be the key Driver of the currency moving forward.
The market has now priced in a 1005 percent chance that the Bank of England will hike rates in May so the guidance for any further rate hikes from the BOE will be crucial for the pound to retain its strength.
“Brexit related news continues to rumble on but, in the approach to the May 10 BoE policy meeting, it could be the outlook for monetary policy that takes the upper hand in guiding the outlook for the Pound,” says Jane Foley, a currency strategist at Rabobank.
“After the expected move from 0.5% to 0.75% this spring, the market is not fully priced for a hike to 1.00% until May 2019. This suggests that for GBP, the most interesting part of next month’s policy meeting may not be the rate decision but the guidance referring to the risk of another rate rise later in the year,” she added.
From a technical point of view the pound is also facing a critical test after failing to significantly break through the $1.43 mark in recent months which has become a major resistance point.
If the pound is able to significantly break through this resistance level over the next few trading sessions, we may see it make a run towards $1.45.
"Prices are starting to push through our 1.4185-1.4250 resistance region. With momentum, still in bull mode and monthly seasonal biased to the upside, the risk is we push up to test the 1.4350-1.4550 medium–term region of resistance again," says Robin Wilkin, cross-asset strategist at Lloyds Bank Commercial Banking.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 58% of retail investor accounts lose money when trading CFDs with this broker. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 58% of retail investor accounts lose money when trading CFDs with this broker. Before deciding to trade foreign exchange you should consider whether you understand how CFDs work, your investment objectives, your level of experience and readiness of taking risk. The possibility exists that you could sustain a loss of some or of all of your initial investments and therefore you should not risk more than you are prepared to lose. Please seek independent financial advice if necessary.
|By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Please familiarize yourself with the Customer Agreement through the link. Click "Cancel" to remain on this page.|