When is the Bank of England interest rate decision and how could it affect GBPUSD?

BoE Monetary Policy Decision – Overview

The Bank of England (BoE) is scheduled to announce its monetary policy decision this Thursday at 12:00 GMT. The UK central bank is widely expected to lift interest rates by 75 bps - the biggest hike since 1989. Meanwhile, the worsening outlook for the UK economy might have already set the stage for a dovish pivot. Hence, the market focus will be on the accompanying statement that provides the Monetary Policy Committee's (MPC) economic and inflation projections. Apart from this, investors will scrutinize BoE Governor Andrew Bailey's comments at the post-meeting press conference at 12:30 GMT.

Analysts at TD Securities offer a brief preview of the key central bank event risk and write: “We look for a 75 bps hike from the BoE in November. While the labour market has tightened further, inflation has matched the MPC's forecasts. Moreover, the several fiscal U-turns and change of PM and Chancellor should lower the risk of a larger hike. The delay of the fiscal event shouldn't mean much for the decision as the broad characteristics of fiscal policy are already known.”

How could it affect GBPUSD?

Ahead of the BoE's Super Thursday, the GBPUSD pair tumbles to a two-week low, below mid-1.1200s on Wednesday amid post-FOMC strong follow-through US dollar buying interest. A dovish BoE tilt could exert additional downward pressure on the British Pound and set the stage for an extension of the pair's recent pullback from a multi-week high. Meanwhile, a decision to frontload the rate hike might do little to provide any respite to bulls amid looming recession risks, suggesting that the path of least resistance for the GBPUSD pair is to the downside.

Eren Sengezer, European Session Lead Analyst at FXStreet, outlines important technical levels to trade the major: “GBPUSD trades within a touching distance of 1.1250, where the 200-period SMA on the four-hour is located. In case the pair falls below that level and starts using it as resistance, additional losses toward 1.1200 (psychological level) and 1.1100 (psychological level) could be witnessed.”

“On the upside, 1.1300 (Fibonacci 61.8% retracement) aligns as first resistance ahead of 1.1350 (Fibonacci 50% retracement, 100-period SMA) and 1.1435 (Fibonacci 38.2% retracement),” Eren adds further.

Key Notes

  •  Bank of England Preview: Why Super-Thursday is set to sink sterling, even in case of a big hike

  •  BoE Interest Rate Decision Preview: A close call between 50 bps and 75 bps, GBP/USD set to suffer

  •  GBP/USD Forecast: Pound looks vulnerable as BoE decision looms

About the BoE interest rate decision

The BoE Interest Rate Decision is announced by the Bank of England. If the BoE is hawkish about the inflationary outlook of the economy and raises the interest rates it will be positive, or bullish, for the GBP. Likewise, if the BoE has a dovish view on the UK economy and keeps the ongoing interest rate, or cuts the interest rate it will be seen as negative, or bearish.