BoE Preview: what to expect of GBP/USD

The Bank of England will hold its monetary policy meeting later in the European afternoon. Market consensus expects the ‘Old Lady’ to keep its refi rate unchanged at 0.25% and the Asset Purchase Facility at £435 billion.

In addition, MPC members are seen voting 8-1 in favour of the current status quo in detriment of further easing.

In light of the violent drop of the Sterling since the Brexit vote back to late June, some investors are of the opinion that a rate cut today could be counterproductive when comes to gauge inflation figures in the medium to longer term. Recall that the BoE is already expecting consumer prices to overshoot the bank’s target due precisely to the weaker GBP.

Regarding FX, Cable is already trading in multi-day tops in the mid-1.2400s after the UK’s High Court ruled against the Government regarding the triggering of Article 50, which will now must be approved by Parliament.

The pair is now looking to break the recent consolidative theme above the decent support area around 1.2080, although the ongoing rally is exclusively driven by USD-dynamics, and in particular, the pre-US elections scenario.