Global macro overview for 01/11/2018

The latest decision of the Bank of England will be made public on Thursday at 12:00 pm GMT. It is expected that the central bank will keep interest rates unchanged, with emphasis on the communication of the Monetary Policy Committee members (MPC) expressed in minutes of meetings, as well as updated quarterly forecasts on GDP and inflation. There will also be Governor Carney's press conference, and his comments may be relevant to the direction of the pound sterling rate as a result of the decision on interest rates.

Analysts expect all members of the Monetary Policy Committee to vote for a BoE rate of 0.75%, which was set in August when the Bank decided to raise rates for the second time in more than a decade. In fact, swap markets show that market participants do not expect further interest rate hikes by 25 basis points until December 2019 - even if they are not fully priced - which reflects a less steep normalization path compared to that forecasted a few weeks ago. By contributing to lower expectations of rate hikes earlier than later, we have contributed to lower expectations for rate hikes sooner rather than later, as well as to further lower uncertainty about Brexit.

Let's now take a look at the GBP/USD technical picture at the H4 time frame. The market has bounced from the level of 1.2696 and is heading towards the next technical resistance at the level of 1.2852. If this level is violated, then the next target for bulls is seen at the level of 1.2919. The nearest technical support is seen at the level of 1.2828. The strong and positive momentum at this time frame supports the short-term bullish outlook.

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