There is a likelihood that the pair will break out higher after the latest BOE rate decision.
Buy the GBP/USD and add a take-profit at 1.400.
Add a stop-loss at 1.3800.
Timeline: 1-2 days.
Set a sell-stop at 1.3860 and add a take-profit at 1.3800.
Add a stop-loss at 1.3950.
The GBP/USD price tilted lower ahead of the upcoming Bank of England (BOE) decision and after the relatively weak ADP jobs data. The pair is trading at 1.3885, which was slightly below the key resistance at 1.3958.
Bank of England Decision Ahead
The BoE will conclude its two-day meeting on Thursday. With the hawkish Andrew Haldane gone, analysts expect that the bank will leave its interest rates unchanged at 0.10%. Also, with the number of Delta variant cases rising in the UK, the bank will likely have a cautious tone. As a result, the bank will likely leave its quantitative easing policy unchanged.
Most importantly, the bank will likely focus on the recent UK inflation data. In May, the bank signalled that the headline Consumer Price Index would rise above 2% briefly and then retreat. However, the headline inflation has overshot the bank’s target in the three straight months.
In June, the headline CPI rose to 2.5%, which was the highest level since 2018. Analysts expect that the rate will rise to about 4% as commodity prices and supply shortages remain. The GBP/USD price will likely rise if the bank delivers a relatively hawkish tone and vice versa.
The GBP/USD also declined after the relatively weak US jobs numbers. On Wednesday, data by ADP showed that America’s private employers added more than 330k jobs in July. This was almost half what analysts were expecting. Later today, the US will publish the latest initial jobless claims numbers. With the Delta variant rising, there is a possibility that the number of people filing jobless claims rose.
On Friday, the US will then publish the latest non-farm payroll numbers. These numbers are expected to show that the economy added more than 700k jobs while the unemployment rate fell to 5.7%.
The GBP/USD pair declined slightly to 1.3882, which was relatively lower than last week’s high of 1.3985. The price has moved slightly below the 50% Fibonacci retracement level. It has also formed a bullish flag pattern on the 4H chart. The pair is also along the 25-day and 50-day moving averages. Therefore, there is a likelihood that the pair will break out higher after the latest BOE rate decision. If this happens, the next key level to watch will be the 61.8% retracement at 1.4000.