News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bullish
Wall Street
Bearish
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • A pretty clean break from $SPX and other risk-sensitive assets are following along. As Hans Landa said in Inglorious Basterds: "Ooooooo. That's a Bingo" https://t.co/fLqS3kL8li
  • US Dollar Index reaches a multi-month high as markets strike a risk-off tone $USD $DXY https://t.co/m8AdjHztFX
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 93.13%, while traders in GBP/JPY are at opposite extremes with 70.14%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/GgwsfrU5lz
  • EUR/USD sheds 40-pips in a matter of minutes as the US Dollar strengthens broadly. Get your $EURUSD market update from @RichDvorakFX here:https://t.co/wIlo9Tbp7A https://t.co/It5iIFhMmL
  • Well, I don't think Powell will temper interest/concern around central banks having to pullback in the foreseeable future. Both 'taper tantrum' and 'operation twist' search interest charging higher: https://t.co/NK17S328F3
  • Indices Update: As of 19:00, these are your best and worst performers based on the London trading schedule: Germany 30: -0.86% FTSE 100: -1.20% France 40: -1.27% Wall Street: -2.32% US 500: -2.53% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/KjNr7ongtX
  • Nasdaq now down over 3% today, confirming 10% correction territory. $QQQ
  • $USDCHF has continued to strength today, now above the 0.9280 level, trading around the highs hit in late September. The pair has performed strongly since mid February as US rates have continued higher, rising from 0.8900 by nearly 400 pips to its current levels. $USD $CHF https://t.co/qrHY8Sy2sf
  • Against the backdrop of rising bond yields, both the Bank of England and European Central Bank will meet over the next two weeks. Get your market update from @CVecchioFX here:https://t.co/bcdEfLJjJ7 https://t.co/vXmdohw4VK
  • Oil - US Crude IG Client Sentiment: Our data shows traders are now at their least net-long Oil - US Crude since Jan 06 when Oil - US Crude traded near 5,008.80. A contrarian view of crowd sentiment points to Oil - US Crude strength. https://www.dailyfx.com/sentiment https://t.co/5dv539nKye
Central Bank Weekly: British Pound Carves Out Reversal Candles after BOE

Central Bank Weekly: British Pound Carves Out Reversal Candles after BOE

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- The BOE’s decision to keep rates on hold was unsurprising, but the 6-3 vote (from 7-2 last meeting) was.

- With Chief Economist Haldane dissenting for a rate hike, odds of a 25-bps tightening move in August have increased from 48% yesterday to 68% today, per overnight index swaps.

- See the full DailyFX Webinar Calendar for upcoming strategy sessions.

Looking to learn more about how central banks impact FX markets? Check out the DailyFX Trading Guides.

The British Pound has been in near freefall since the middle of April, thanks in part to the machination of Bank of England Governor Mark Carney. After all, it was two months ago when he threw water on the idea that the BOE would hike rates in May, and indeed, as time wore out, no rate hike transpired.

As evidenced by today, the BOE and Governor Mark Carney are still as significant factors for the British Pound as they were back in April when GBP-crosses topped. But if the past two months were marked by dovish influence, the June rate decision may have yielded a more hawkish outcome than anticipated; the BOE is the catalyst for the British Pound’s reversal, just as it was the author of its demise.

Bank of England Rate Hike Expectations (June 21, 2018) (Table 1)

Central Bank Weekly: British Pound Carves Out Reversal Candles after BOE

Although the BOE voted to keep its main overnight rate on hold at 0.50%, the Monetary Policy Committee’s vote breakdown indicated a more hawkish tilt than in times past. Coming in at 6-3 from last meeting’s 7-2 vote, Chief Economist Andy Haldane joined the ranks of the dissenters in calling for a 25-bps rate hike.

In turn, with arguably the second most important policymaker at the BOE (besides the Governor himself) joining the hawks, odds for a rate hike in August – when the next Quarterly Inflation Report is released – have jumped from 48% at the close yesterday to 68% today, per overnight index swaps. In turn, the British Pound has emerged as the top performing currency on the session.

GBP/USD Price Chart: Daily Timeframe (September 2017 to June 2018) (Chart 1)

Central Bank Weekly: British Pound Carves Out Reversal Candles after BOE

The sharp rebound in rate hike odds over the past 24-hours has produced a number of significant candlestick reversal patterns across the GBP-spectrum: GBP/USD is working on a bullish daily key reversal; GBP/JPY a bullish piercing candle (missing a bullish outside engulfing bar by 1-pip); and EUR/GBP a bearish piercing candle (missing a bearish outside engulfing bar by 2-pips). Similarly bullish price action has likewise emerged in GBP/AUD, GBP/CAD, and GBP/NZD.

Moving forward, for the British Pound to produce any sort of meaningful follow-through to today’s promising price action, a number of developments will need to break its way over the coming days and weeks. Primarily, economic data momentum needs to continue to improve to substantiate the BOE’s belief that the Q1’18 slowdown was “temporary.” Additionally, Brexit drama surrounding UK Prime Minister Theresa May’s cabinet needs to be kept in the background (facing down a pro-EU rebellion in Parliament was a start).

Read more:DXY Index, EUR/USD Inside Day Candlesticks Take Shape

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES