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The dollar is still reeling from the more dovish Fed yesterday, especially Powell’s press conference. September looks to be a done deal barring any major surprises in the economy in the next six weeks. USD/JPY in particular is feeling the pinch after the BOJ hiked rates yesterday, with the pair settling below 150.00 currently.
The central bank bonanza will continue today with the BOE and it will be a fairly interesting one as well. The central bank is likely to cut the bank rate at the balance, but expectations are for the votes to be either 5-4 or 6-3 in favour of a rate cut. The likely dissenters are Pill, Haskel, Mann, and possibly Greene.
Naturally, if the BOE doesn’t move with a rate cut today, the decision will be a dovish hold surely. But how will markets take to that?
Currently, traders are pricing in a ~58% probability of a rate cut. So, therein lies the risk for the pound. It’s pretty much a 50-50 call based on the odds. As such, any decision will result in quite decent price movement as markets readjust their rates pricing.
Besides that, there will be some other smaller releases to move things along in European morning trade before the main event.
0600 GMT – UK July Nationwide house prices
0715 GMT – Spain July manufacturing PMI
0745 GMT – Italy July manufacturing PMI
0750 GMT – France July final manufacturing PMI
0755 GMT – Germany July final manufacturing PMI
0800 GMT – Eurozone July final manufacturing PMI
0830 GMT – UK July final manufacturing PMI
0900 GMT – Eurozone June unemployment rate
1100 GMT – BOE announces its August monetary policy decision
1130 GMT – BOE governor Bailey press conference
1130 GMT – US July Challenger layoffs, job cuts
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.