Market Spotlight: Trading Today's BOE Meeting

31489 market spotlight trading todays boe meeting

BOE In FocusThe February Bank of England meeting due today is drawing a great deal of focus, with the market widely expecting the BOE to hike rates by a further .25% to 0.5%. With omicron risks having fizzled out, the labour market continuing to tighten and inflation soaring, there seems little case for the BOE refraining from action today.Given the market’s view, the focus will therefore mostly be on the bank’s accompanying outlook and economic forecasts. The market has turned more hawkish in its expectations since the last meeting and will be looking for the BOE to upgrade its own language, to satisfy these expectations. Specifically, the focus will be on the BOE’s rate path projections. The market is currently ahead of the BOE, looking for rates to hit 1.25% by year end and so will be looking for an upward revision from the BOE today.If the BOE delivers on meeting these hawkish expectations, then GBP is likely to see a strong bid on the back of the meeting. However, if the BOE fails to satisfy GBP hawks, we might see some near-term unwinding of GBP.Where to Trade the February BOE Meeting?GBPUSDThe pair looks to be carving out a large, sloping, inverse head and shoulder pattern with the right shoulder forming off the 1.3349 level. With US Fed member commentary having softened a little this week, there is room for GBPUSD to advance if the BOE turns more aggressively hawkish. Look for a break of the channel top and 1.3676 level, targeting 1.38 initially and 1.40 thereafter.

Source: Tickmill

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