This week, the GBP could experience significant fluctuations as key events unfold.
On Wednesday morning (UK time), UK Headline Inflation is expected to reveal one of the lowest readings in over a year, while the core reading is anticipated to remain steady at 6.8% y/y. The recent GBP strength has been fuelled by rising yields, but this trend may reverse during the Bank of England meeting on Thursday.
The current projection from interest rate markets suggests the potential for five more 25 bps rate hikes from the Bank of England, resulting in a terminal rate of 5.75%. However, there are concerns that this pricing may have escalated too rapidly. The Bank of England could provide a more cautious outlook on the future path of rates. If inflation surprises on the downside and the Bank of England adopts a more restrained stance, there could be significant selling pressure on the GBP during Wednesday and Thursday.
The Seasonax risk event feature reveals that in the last 15 years, when the BoE hikes interest rates the GBPUSD has fallen over 80% of the time with an average fall of -1.01%. If the BoE fail to deliver on the extremely hawkish expectations then watch for GBP selling over the decision.
Major Trade Risks: The main risk would be if the BoE increases hawkish expectations.
Disclaimer: Past results and past seasonal patterns are no indication of future performance, in particular, future market trends. seasonax GmbH neither recommends nor approves of any particular ...
Disclaimer: Past results and past seasonal patterns are no indication of future performance, in particular, future market trends. seasonax GmbH neither recommends nor approves of any particular financial instrument, group of securities, segment of industry, analysis interval or any particular idea, approach, strategy or attitude nor provides consulting nor brokerage nor asset management services. seasonax GmbH hereby excludes any explicit or implied trading recommendation, in particular, any promise, implication or guarantee that profits are earned and losses excluded, provided, however, that in case of doubt, these terms shall be interpreted in abroad sense. Any information provided by seasonax GmbH or on this website or any other kind of data media shall not be construed as any kind of guarantee, warranty or representation, in particular as set forth in a prospectus. Any user is solely responsible for the results or the trading strategy that is created, developed or applied. Indicators, trading strategies and functions provided by seasonax GmbH or on this website or any other kind of data media may contain logical or other errors leading to unexpected results, faulty trading signals and/or substantial losses. seasonax GmbH neither warrants nor guarantees the accuracy, completeness, quality, adequacy or content of the information provided by it or on this website or any other kind of data media. Any user is obligated to comply with any applicable capital market rules of the applicable jurisdiction. All published content and images on this website or any other kind of data media are protected by copyright. Any duplication, processing, distribution or any form of utilisation beyond the scope of copyright law shall require the prior written consent of the author or authors in question. Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.
