MaiMarFX | May 06, 2021 04:37AM ET
The best performer on Wednesday was the DAX which rebounded towards 15200 while we have made a large catch with our long entry at 15020 that ended with a 100-points profit.
Today the focus turns to the British pound and the Bank of England’s monetary policy decision. Some investors expect the central bank to slow the pace of bond purchases by a small amount instead of ending the stimulus abruptly in November. Policy makers are also expected to upgrade forecasts for growth and inflation today.
The pound will rally if the BoE tapers more drastically than currently expected. However, a slowdown in the pace of purchases could probably not have the same impact as the tightening seen by the Bank of Canada last month but it will be important to know whether rate hike expectations are being brought forward and whether there is still a likelihood of a further total envelope or not as the UK economy rebounds sharply from pandemic lows. If the BoE disappoints the market’s hawkish expectations, the pound could fall below 1.38.
h2 GBP/USD/h2The cable remained in a narrow trading range ahead of today’s risk event and we expect some larger movement around the BoE decision. Above 1.3915 we see a next resistance at 1.3950 which needs to be broken before shifting the focus to 1.40 again. A bullish breakout above 1.4010 could result in a strong bullish move towards 1.42. On the downside we will keep an eye on the support levels. A break below 1.38 could lead to a test of 1.3770, followed by a lower target at 1.37. Below 1.3660 the pound could extend its slide towards 1.3550.
Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.