DailyFX.com -

Talking Points:

  • BOE Minutes Reveal an Interest Rate Vote of 7-2 By the MPC Members.
  • GBP/USD Surge After The BOE Minutes To Trade Above 1.6650
  • Looking Ahead The July’s FOMC Minutes Will Take Center Stage.

Want to trade with proprietary strategies developed by FXCM? Find out how here.

The much anticipated Bank of England (BoE) Minutes for the month of August revealed that BOE policy makers were split on an interest rate hike. The interest rate vote (7-2) showed two MPC members (BOE’s Weale and McCafferty) were calling for a 25 basis-point rate hike in August justified by the strong economic growth in the UK. However, the majority were reluctant for a rate increase as they argue an early rise may leave the economy exposed to shocks such as putting pressure on indebted households and derail economic growth. Moreover, the majority remarked that the recent weaker-than-expected CPI prints and outlook from the UK did not justify a rate increase.

Ahead of the BOE Minutes, the British Pound fell as low as the critical 1.6600 level against the US Dollar. Immediately after the release, GBP/USD surged over 40 pips to trade above the psychologically significant 1.6650 level. Moreover, the UK 10-year Gilt yield rose 4 basis-points to 2.44 percent after the BOE Minutes. This suggest that traders are increasing their bets for the BOE to raise interest rate sooner-than-later. The emergence of MPC members siding with the more hawkish stance may be the catalyst for surge in GBP/USD says DailyFX Currency Strategist Ilya Spivak.

Looking ahead, July’s FOMC Minutes by the Federal Reserve will take center stage and is scheduled to be released at 18:00 GMT, later today. If the rhetoric from the FOMC minutes remain dovish, it may act to weigh on the greenback says DailyFX Currency Analyst David De Ferranti. For the remainder of the week, the key event risk is expected to come from China’s PMI data and Jackson Hole.

For those forex traders that endorse technical analysis, Ilya Spivak mentions near-term support rests at 1.6611 (23.6% Fib Exp.) and resistance at 1.6659 (14.6% Fib Exp.). He remains flat for now as he argues against entering short with prices trading in close proximity to support level and there is an absence of a defined bullish reversal signal. Meanwhile according to DailyFX Speculative Sentiment Index, the ratio of long to short positions in the GBP/USD stands at 1.76 as 64 percent of traders are long.

GBP/USD 5 Minute Chart

GBP/USD Surges Above 1.6650 As BOE Voted 7-2 To Leave Rate Unchanged

Daily Chart - Created Using FXCM Marketscope 2.0, Volume Indicator Available Here


Edward Hyon, DailyFX Research Team

Keep up to date on event risk with DailyFX Calendar

Related Articles
  1. Investing News

    China’s Forex Reserves Dropped Significantly

    China’s forex​ reserves dropped by a record $93.9 billion at the end of August to $3.56 trillion because the Central Bank has been selling dollars to provide a cushion to the falling yuan​
  2. Forex

    The Pros and Cons of a Fully Convertible Rupee

    Amid the rising economic power of India, the talks of making the Indian currency fully convertible are gaining momentum. We look at the pros and cons.
  3. Forex Fundamentals

    Chinese Yuan an Unlikely Reserve Currency

    As the world's second largest economy, China's challenge to America’s dominance includes a push to make the yuan (RMB), the world’s reserve currency. Whether it can do that now is unclear.
  4. Economics

    How Currency Enforcement Helped Sink The Trans-Pacific Partnership (TTP)

    One particular barrier to trade that has received much attention of late and caused delays in negotiations of the TPP is exchange-rate manipulation, by which a country artificially devalues its ...
  5. Forex

    Top U.S Forex News Sites

    Breaking news moves forex markets. Here are the top U.S. sites for tracking forex news.
  6. Investing

    Financial News Comparison: Bloomberg Vs. Reuters

    Access to financial information has grown with the expansion of digital news. Bloomberg and Thomson Reuters lead the pack, claiming a majority of the business information market.
  7. Economics

    Who Benefits From South Korea's Lowered Interest Rates?

    South Korea is the latest country to cut interest rates in an attempt to stimulate economic growth.
  8. Forex Education

    The Top Uses For P2P Currency Exchange

    Peer-to-peer (P2P) currency exchange networks offer a viable and cheaper alternative for buying and selling currencies.
  9. Forex

    Steps To Open An Offshore Forex Account

    Here is a simple breakdown of how to open an offshore forex account for US-based users, including legal requirements.
  10. Entrepreneurship

    Top Forex Trading Apps

    A brief overview of the top apps that help forex traders with on time information, charts and more.

You May Also Like

Hot Definitions
  1. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center