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British Pound (GBP) Price Outlook: Mildly Positive Ahead of BoE Meeting

British Pound (GBP) Price Outlook: Mildly Positive Ahead of BoE Meeting

Martin Essex, MSTA, Analyst

GBP price, news and analysis:

  • GBP/USD should be helped near-term by news that the UK is to begin negotiations to join the Trans-Pacific trade bloc and by a possible easing of UK travel restrictions for vaccinated people.
  • However, it is unlikely to stray far from the 1.39 level ahead of Thursday’s meeting of the Bank of England’s monetary policy committee, which will be monitored closely for any warnings on inflation.

GBP/USD outlook: steady to a tad firmer

GBP/USD will likely stay close to the 1.39 level ahead of the meeting Thursday of the Bank of England’s monetary policy committee (MPC) but the bias could be to the upside as long as there is no strong advance in the US Dollar prompted, for example, by comments from the array of Federal Reserve members speaking over the next few days.

GBP/USD Price Chart, One-Hour Timeframe (June 15-22, 2021)

Latest GBP/USD price chart

Source: IG (You can click on it for a larger image)

One positive is news that the UK Trade Secretary Liz Truss is to begin formal negotiations Tuesday on the UK’s possible accession to the so-called Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – a free-trading bloc. Another is a report that UK travel restrictions could be eased for people who have been vaccinated against Covid-19.

However, GBP/USD traders should wait for Thursday’s meeting of the MPC before deciding on the longer-term direction of the pair. That will depend on whether the MPC signals concerns about inflation, which rose in May to 2.1% – its highest level for almost two years – and whether any more MPC members join the BoE’s outgoing Chief Economist Andy Haldane in voting to end the Bank’s bond-buying program.

--- Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex

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