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- Bank of England (BoE) Widely Expected to Preserve Current Monetary Policy.
- Will There Be Another Unanimous Vote Within the Monetary Policy Committee (MPC)?
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Trading the News: Bank of England (BoE) Interest Rate Decision
The Bank of England (BoE) interest rate decision may dampen the appeal of the British Pound and generate a near-term selloff in GBP/USD should the central bank trim its economic forecast and continue to endorse a wait-and-see approach.
What’s Expected:
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Why Is This Event Important:
However, bright signs coming out of the U.K. economy may ultimately spark a dissent within the Monetary Policy Committee (MPC), and the pound-dollar may continue to retrace the sharp decline from the previous year should the BoE highlight a tightening race with the Federal Reserve to normalize monetary policy.
Expectations: Bearish Argument/Scenario
| Release | Expected | Actual |
| Retail Sales ex Auto Fuel (MoM) (JUN) | 0.4% | -0.2% |
| Jobless Claims Changes (JUN) | -9.0K | 7.0K |
| Consumer Price Index Core (YoY) (JUN) | 0.9% | 0.8% |
Subdued price growth along with the recent slowdown in private consumption may encourage another unanimous vote within in the committee, and a further delay of the normalization cycle may produce near-term headwinds for the sterling as it drags on interest rate expectations.
Risk: Bullish Argument/Scenario
| Release | Expected | Actual |
| Mortgage Approvals (JUN) | 66.0K | 66.6 |
| Gross Domestic Product (QoQ) (2Q A) | 0.7% | 0.7% |
| CBI Business Optimism (JUL) | 1 | 8 |
However, improved confidence paired with the narrowing slack within the real economy may prompt a split-vote within the MPC, and the fresh developments may pave the way for a higher-high in GBP/USD as the pair retains the upward trend carried over from April.
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How To Trade This Event Risk(Video)
Bearish GBP Trade: BoE Votes Unanimously to Retain Current Policy
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Need red, five-minute candle following the rate decision to consider a short GBP/USD trade.
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If market reaction favors selling Cable, short GBP/USD with two separate position.
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Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
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Move stop to entry on remaining position once initial target is hit, set reasonable limit.
Bearish GBP Trade: MPC Highlights Growing Dissent/Greater Willingness to Normalize Policy
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Need green, five-minute candle to favor a long GBP/USD trade.
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Implement same setup as the bearish sterling trade, just in the opposite direction.