Sterling traders are bracing for potential volatility in the pound today as the Bank of England delivers its latest rate decision midway through the London trading session. The consensus is that the Monetary Policy Committee (MPC) will keep rates on hold at 5%, despite some encouraging signs that inflation is trending towards the Bank’s target. Traders are likely to focus more on the policy statement and the voting breakdown than the rate decision itself. However, if the MPC were to unexpectedly cut rates, it would likely cause a significant drop in the pound.
Cable experienced significant fluctuations in trading yesterday following the Federal Reserve’s 50-basis point rate cut. Initially, it surged to a fresh yearly high just below 1.3300, reaching levels not seen since early 2022. However, subsequent dollar buying pressure pulled it back into recent ranges, and it is currently hovering around the 1.3200 level as we approach the Bank of England announcement. Key resistance is expected at last night’s high, with initial support around last week’s low, just below 1.3000, leaving ample room for significant movements after the decision.
Resistance 2: 1.3746 – 2022 High
Resistance 1: 1.3297 – Overnight High and Resistance Trendline
Support 1: 1.2999 – Sept 11 Low
Support 2: 1.2814 – Trendline Support
