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All Eyes on the Pound’s Direction Following a Sharp Drop on the Back of the BOE’s Policy Rate Decision

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All Eyes on the Pound’s Direction Following a Sharp Drop on the Back of the BOE’s Policy Rate Decision

04.11.2022

Today's Highlights
  1. U.S. Employment Report
  2. Canada-Ivey Purchasing Managers' Index

In U.S. currency trading the previous day, the U.S. dollar surged during U.S. trading hours after the U.S. October Manufacturing PMI, released yesterday, came in at 50.4—exceeding the market forecast of 49.9. The GBP/USD pair fell by approximately 270 pips from 1.1420 to 1.1150.On the 4-hour chart, the pair broke below the uptrend that had been in place since late September. From a technical perspective, since GBP/USD is trading just below the 200-period SMA on the 4-hour chart, it will be worth watching to see if a rebound occurs during U.S. trading hours.

Among European currencies, the pound fell sharply immediately after yesterday’s Bank of England (BOE) policy rate announcement, in which the central bank raised rates by 0.75%—in line with market consensus—bringing the policy rate from 2.25% to 3.00%.GBP/JPY fell approximately 340 pips from 168.558 to 165.107, following a downtrend along the 10-period moving average (MA) on the hourly chart. Since GBP/JPY rebounded during today’s Asian session without touching the 200-period simple moving average (SMA) on the hourly chart, we will be watching closely to see if a rebound and rise occur during the European session.

Today, during European trading hours, German manufacturing orders will be released at 16:00, followed by FrenchIndustrial Production, at 17:30 a statement by German Bundesbank President Nagel, at 18:30 the UK Construction PMI and a statement by ECB President Lagarde, at 19:00 theProducer Price Index, at 21:15 the UK’s MPC member Pill’s remarks, and during U.S. trading hours at 21:30 the Canadian unemployment rate and U.S. employment report, followed by the Canadian Ivey Purchasing Managers’ Index and remarks by U.S. Federal Reserve Bank of Boston President Collins at 23:00.We will be watching the direction of the pound, which fell sharply following the BOE’s policy rate announcement.

桜井 慶介

Author: Keisuke Sakurai

He has over 10 years of experience in FX trading. In the financial sector, he has been involved in investment management with a particular focus on foreign exchange markets, and he also has experience as an asset management advisor. Drawing on his extensive experience, he specializes in technical and fundamental analysis.

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All eyes are on whether the euro-dollar pair, which appeared to be breaking below a key level, will maintain its upward momentum
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