The Attention Is Focused on the BoE Meeting

On the GBP/USD currency pair, bearish sentiments are still prevailing. Over the past two months, the pound has weakened against the US dollar by more than 7%. At the moment, the trading instrument is testing the annual minimum. Demand for the American currency remains at a high level. It should be recalled that last week, the Fed raised the key interest rate range by 25 basis points to 1.75%-2.00%. The regulator published optimistic economic forecasts and expects two more interest rate increases in 2018.

The meeting of the Bank of England will be the key event in the current trading week. The Monetary Policy Committee will announce its decision on the key interest rate on June 21 at 14:00 (GMT+3:00). It should be noted that earlier the head of the Central Bank, Mark Carney, was concerned about slowing inflation and said that the rate hike could be postponed until the end of this year. Since the last meeting of the Bank of England, a number of optimistic statistics on economic activity, retail sales, and the labor market have been published. We do not exclude that representatives of the Central Bank may be more optimistic in their statements.

UK Interest Rate
Source: tradingeconomics.com

At the moment, most participants in financial markets expect that the Bank of England will leave the key interest rate unchanged at 0.50%. At the meeting on June 21, the press conference of the Central Bank head won`t take place. We recommend you to pay attention to changes in the structure of voting for raising the key interest rate.

Let's look at the current technical pattern on the GBP/USD currency pair
  • Support levels: 1.31750, 1.31000
  • Resistance levels: 1.32250, 1.33000, 1.34000
GBP/USD Pattern

At the moment, the GBP/USD currency pair has overcome the key level of 1.32250, which is already a "mirror" resistance. Local support is the level of 1.31750. The GBP/USD quotes are tending decline. Indicators point to the power of sellers:

- The price has fixed below 50 MA and 200 MA;
- The MACD histogram is located in the negative zone and continues to decrease.

Nevertheless, we recommend you to open positions from the key levels.

If the price fixes below the local support of 1.31750, further drop is expected. The closest target for profit taking is the round level of 1.31000.

Alternative option. If the price fixes above the "mirror" resistance of 1.32250, a correction movement is expected. The movement is tending to the round level of 1.33000.

When following the positions, we recommend using a trailing stop.

by JustForex, 2018.06.20

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

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