Bank of England - BOE

Top Forex Trade Setups, Dec 20 – Bank of England Ready to Release Policy Rate

Posted Thursday, December 20, 2018 by
Arslan Butt • 2 min read
  • The FOMC raised the Fed fund rate from 2.25% to 2.50%, as widely expected.
  • Inflation in the United Kindom remains cool, as it fell from 2.4% to 2.3% in November.
  • What to expect from the Bank of England’s monetary policy decision, especially the MPC official bank rate votes.
  • How to trade Sterling over Retail Sales today?

On Thursday, the dollar index trades steady in Asian session as the Federal Reserve turned back from an aggressive policy tightening route. As expected, the dollar spiked on this news but reversed immediately afterward. Today, the investor focus remains on the Bank of England monetary policy decision. Here’s what to expect from them.

Major Forex Setups & Economic Events Today

GBP/USD – The Breakout the Downward Channel

On the 4-hourly chart, the cable violated the resistance level of $1.2600 to come out of the bearish channel. Looks like the pair is taking a bullish reversal, however, we can’t say much until the release of monetary policy from the Bank of England.

Technically, the GBP/USD is likely to face a strong resistance near 1.2690, which is extended by 50 periods EMA. The pair is trading below double top resistance of 1.2400, which is also extended by a bearish channel.

The series of neutral candles are representing indecision among investors. Looks like traders are waiting for the Bank of England rate decision before placing any bets on Sterling.

Potential Economic Events to Impact

Bank of England’s Monetary Policy Decision
At 12:00 (GMT), the Official Bank Rate rate will be monitored. The probabilities for any adjustment in rate are almost 0%. The BOE is widely expected to keep the rate on hold at 0.75%.

What’s there for us to trade?
It’s the MPC Official Bank Rate Votes which is likely to be the focus of attention. The BOE MPC meeting minutes include the interest rate vote for all MPC members from the most recent meeting. The division of votes presents an insight into which members are shifting their stance on interest rates and how the committee is to determine a rate change in the future. For the moment, the votings are 0-0-9, which means that all the members are expected to vote to hold the rate.

Retail Sales m/m
At 9:30 (GMT), the Office for National Statistics is scheduled to release retail sales. Economists are expecting a jump in retail sales from -0.5% to 0.3% this month. If you are thinking, how retail sales can rise if their inflation is down from 2.4% to 2.3%.

Well, the Bank of England reasoned that falling prices are caused by cheaper crude oil. If that’s actually the case, then we may see positive retail sales. Else, let’s be ready for a dip in the Sterling.

Daily Technical Levels
Support   Resistance
1.2607     1.2697
1.2567     1.2747
1.2477     1.2837
Key Trading Level: 1.2657

GBP/USD – Trade Plan

Today, the idea is to stay bearish below $1.2700 to target 1.2600, while buying will be preferred above $1.2720 today.

Good luck and stay tuned to FX Leaders for more updates and trading signals.

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