Market participants are waiting for the next increase in the interest rate from the Bank of England, by 0.75% to 3.0%. This is the strongest one-time rate increase since the late 80s, which indicates, firstly, the high level of inflation in the UK and, secondly, the determination of the leadership of the Bank of England to fight it. Nevertheless, there is a weakening of the pound, including in cross-pairs. It is possible that the markets take into account a softer decision on the interest rate, as well as the “dove” rhetoric of subsequent statements by the leaders of the Bank of England.
If the results of today’s meeting of the Bank of England really disappoint market participants, then the GBP/USD pair risks falling even lower, heading towards the September lows and the 1.0353 mark.
The nearest support for GBP/USD is at 1.1080 (lower line of the rising channel on the daily chart), 1.0940 (local October low).
Their breakdown will confirm our main scenario of GBP/USD decline (for more details and an alternative scenario, see “GBP/USD: technical analysis and trading recommendations for 03.11.2022“).
*) for important events of this week, see the Most Important Economic Events of the Week 10/31/2022 – 11/06/2022
Support levels: 1.1200, 1.1100, 1.1080, 1.0940
Resistance levels: 1.1370, 1.1440, 1.1455, 1.1640, 1.1900, 1.1920, 1.2150
