Technical Analysis

Sterling stays under pressure after BOE decision

It was as best as the BOE could have played it in my view, in terms of guiding markets to thinking that they would be less aggressive next and that we can come to expect a 25 bps rate hike as the next move by the central bank. I covered the details here.

So, what does that mean for the pound? I don’t think it changes anything. The BOE tightening cycle has reached its sunset stage and this gives further credence to that notion. Policymakers are angling towards a slower pace at the tail-end of the procedure and the statement and monetary policy report reaffirms that as well.

Ahead of today’s decision, I mentioned that there isn’t much to be optimistic about the pound and I still don’t see reason for that after the BOE. The pound is struggling with cable now dipping just below 1.2300 and threatening a break of its recent consolidation.

Meanwhile, EUR/GBP has a clear and easy path towards 0.9000 now as long as the ECB sticks to the script later today.

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