BOE Eyed Next

GBPUSD remains weak today, ahead of tomorrow’s closely watched BOE meeting. The pair has been on a steady slide since the September highs around the 1.37 mark, no trading down at 1.30, marking 7-month lows. A bullish shift in USD over recent weeks accompanied by a weakening of the Pound has seen the pair under sustained selling pressure. Looking ahead this week there is plenty of potential for fresh downside if we see a dovish surprise from the BOE tomorrow.

Weak Inflation in Focus

Rate cut chances for November had been sidelined in recent months. However, a slew of weaker-than-forecast data recently, notably a cooler CPI reading, has seen traders reviving rate cut bets ahead of the meeting. If the bank does keep rates steady tomorrow, guidance is likely to lean on the dovish side, boosting expectations of a December cut, which should keep GBP pressured for now.

Reeves’ Pre-Budget Speech

The impact of Rachel Reeves speech yesterday ahead of the upcoming UK Autumn Budget has been broadly negative for Sterling also. Critics claim that Reeves speech was short on details and investors were left lacking reassurance after the Budget. While Reeves cited the need to tackle high borrowing costs not glimpse was offered into how this might be achieved. As such, GBP remains skewed lower with traders wondering whether the govt will be able to tackle this issue effectively at all.

Technical Views

GBPUSD

The break below the bull trend line is gathering pace now with price breaking down below a key ledge of support at the 1.3177 level. While that level remains above as resistance, focus is on a continuation lower. If we break the 1.30 level price is currently testing, focus will turn to 1.2711 next, in line with bearish momentum studies readings.