GBP to Gain Support from BOE Minutes This Week

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The pound might be ready to resume its climb against its major counterparts this week, with the BOE (Bank of England) monetary policy meeting minutes or BOE minutes set for release. From a technical standpoint, GBP/USD has been stalling in the middle of a rising trend channel, waiting for fundamental clues to establish a clearer direction.

Recall that BOE Governor Carney recently hinted that the UK central bank is already looking to hike interest rates before the UK general elections takes place in May next year. It remains to be seen though whether this is just his personal opinion or if its a consensus among BOE policymakers.

When Fed Chairperson Yellen mentioned that the Fed might hike rates around six months after asset purchases end, the US dollar enjoyed strong rallies. However, when the FOMC meeting minutes were released a few days later, the dollar sold off sharply when the report showed that not all Fed officials supported Yellen’s rate hike forecast. A similar scenario might take place for the pound if several BOE officials oppose Carney’s outlook.

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BOE Minutes Preview

In their monetary policy statement, the BOE made no changes to interest rates and asset purchases for the meantime. There was no press conference at that time since BOE officials had their meeting cut short to attend the IMF Summit later on.

The release of the minutes should contain more detail on the discussions during the monetary policy meeting and shed light on how many policymakers believe that the BOE should start tightening policy. A unanimous vote in keeping monetary policy unchanged is expected but the accompanying remarks of the policymakers could dictate pound direction this week.

Bear in mind that the UK recently released a set of strong data, particularly a very upbeat jobs report. This might be included in the remarks of policymakers and add support for GBP/USD.

To contact the reporter of the story: James Brennan at james@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.