No Surprises Expected From Bank Of England
The Pattern, Price & Time Report | Jul 05, 2012 06:08AM ET
The September British Pound is under slight pressure overnight as traders await the next move by the Bank of England. While the European Central Bank will be cutting its benchmark rate, the BoE will be looking to apply more stimulus measures. Expectations are for the BoE to increase the size of its quantitative easing program by 50 billion pounds ($78.3 billion). This will bring the total for the program to 375 billion pounds.
Technically, the Sterling is in a downtrend on the daily chart. A trade through the last swing top at 1.5720 will turn the main trend up, but a move through 1.5773 is likely the trigger point for an acceleration to the upside.
Based on the main range of 1.5266 to 1.5773, the retracement zone at 1.5520 to 1.5460 may become a key support area. Additional support is on an uptrending Gann angle at 1.5506. The current resistance angle is at 1.5663.
I don’t expect any surprises from the central bank so prices are likely to consolidate after the news as traders prepare for Friday’s U.S. Non-Farm Payrolls report. If this report comes out worse than expected then the U.S. Dollar should weaken against the British Pound.
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