GBP Advances As BoE Ready To Do More

After two between meetings rate cuts, it was hardly surprising that the BoE stayed pat on monetary policy today. The central bank voted to keep interest rates on hold at record low levels of 0.1% after two cuts in 8 days up to 19th March. During this time the BoE had also ramped up its bond buying to purchase £200 billion extra, measures taken in an attempt cushion the blow from the coronavirus hit to the economy.

The BoE in its accompanying statement today said that it stood ready to expand asset purchases further if necessary.

Given the big gun announcements and large swings that we have seen over the past few weeks, today’s meeting was quite the non-event, with the pound steadily advancing post meeting
The BoE highlighted the uniqueness of the economic outlook, unlike any crisis that the central bank has had to navigate through before. The BoE predicts a sharp hit to global GDP through the first half of the year. Unemployment is expected to rise rapidly. However, the BoE still considers this to be a temporary hit, particularly if business failures and job loses can be avoided.

ECB validates its pledge
Meanwhile the ECB has loosened the self-imposed limits, giving itself an unprecedented level of flexibility it its plan to buy €750 billion in additional bonds to limit the impact of the financial fallout from coronavirus. Almost all of the constraints from previous asset purchases have been removed or loosened significantly. This move validates the ECB’s pledge to backstop the markets amid no limit to its commitment to the euro.
These moves from the BoE and the ECB come after the Fed pledged unlimited bond buying if necessary.

EUR/GBP levels to watch
EUR/GBP is trading 0.3% lower at 0.9121, below its 50, 100 and 200 sma on the 1 hour chart, a bearish chart.
Immediate support can be seen at 0.9120 (today’s low) prior to 0.9055 (yesterday’s low) and 0.8995 (low 20th March)
Resistance is seen at 0.9237 (today’s high) prior to 0.9250 (yesterday’s high)

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.