Sterling traders are expecting to have a busy trading day today, with the Bank of England set to cut rates again in the London session and Donald Trump expected to announce a trade agreement with the UK early in the New York session.
The Bank of England is fully expected to cut rates for a fourth time today, from 4.50% to 4.25%, midway through the London day, and anything other than that will see big moves in the pound. However, we are more likely to see volatility on the back of the forward guidance that we get from the Monetary Policy Report and the Monetary Policy Statement, which are released at the same time. There is no doubt that a good trade deal announcement from President Trump would add support to sterling, and if this is combined with something close to a ‘hawkish cut’ from the MPC, then we could see big moves north in the Cable.
Cable has seen some good moves over the last couple of sessions, covering a 1.3277/1.3402 range, but a more positive outlook from a cautious MPC could see it climb to challenge the short-term resistance trendline on the hourly chart and then the annual highs located up near 1.3450. A more dovish update from the bank could put some pressure on the pound and push it back towards recent lows just under 1.3250. Whatever the outcome today, traders are expecting the pound to be trading at a different level come this time tomorrow.
Resistance 1: 1.3444 – Long-Term Trendline Resistance 2025 High
Resistance 2: 1.3402 – Trendline Resistance and May High
Support 1: 1.3232 – May Low
Support 2: 1.2931 – Long-Term Trendline Support
