Two trades to watch: GBP/USD, FTSE

GBP/USD & FTSE look towards the BoE on super Thursday. No change in policy is expected, the quarterly inflation report & BoE Governor Andrew Bailey's comments will be in focus.

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GBP/USD in focus on BoE super Thursday 

GBP/USD is licking its wounds. The Dollar rallied on Wednesday following hawkish comments from Clarida and record ISM services data.

All eyes are on the Bank of England. No fireworks are expected. The central bank is expected to keep monetary policy unchanged. 

The quarterly inflation forecast and comments from Andrew Bailey will be crucial as the UK economic recovery shows signs of slowing amid rising covid cases. 

US initial jobless claims and Challenger job cuts are also due. 

Read BoE preview 

Where next for GBP/USD? 

GBP/USD broke out of its descending channel at the end of last week. However, the price failed to retake the 50 sma on the 4 hour chart and continues to hover around 1.39. 

Whilst the RSI is neutral, the MACD is showing receding bullish bias which combined with the pairs inability to break 1.40 could support a move lower. A break below 1.3840 the upper channel band could see the sellers target 1.3740 low July 5 &8 ahead of 1.3572 the July low. 

A break above the 50 sma could see the price target 1.40. A move above this key psychological level is needed to attack 1.4130. 

 

FTSE edges lower with earnings & BoE in focus 

European bourses are set for a mixed start with earnings & BoE in focus.  

Commodities are under pressure amid the stronger US Dollar and travel stocks could attract some attention after the government eased travel restrictions adding more countries to the green and amber lists. 

Earnings due from Glencore, Rolls Royce & WPP. 

Where next for the FTSE? 

The FTSE has been grinding higher since July 19. However, failure to break above 7150 combined with a possible bearish crossover forming on the MACD suggests there could be more downside.  

That said any move lower would need to break below 7100 the high Jul 29 before attacking 7080 the descending trendline dating back to mid June and the 50 sma at 7053. 

Any move higher needs to over come 7050 in order to attack 7075 the July 13 high and 7175 the July high. 


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