News

Pound Holds Steady Ahead of Bank of England Meeting

GBP

The British pound traded sideways against other counterparts ahead of the monetary policy meeting of the Bank of England. The market is not expecting a change in policy settings, with asset purchases remaining at 875 billion pounds, the corporate bonds program at 20 billion pounds, and interest rates at their low level of 0.10%. However, any changes in the voting for asset purchases tapering which was 8-1 last time, could impact the market. Inflation rose significantly recently, and the economic activity is picking up as the kingdom moves forward with reopening its economy, but the latest delay due to the delta variant could affect the bank's timeline. The GBPUSD is trading near $1.3955, and the GBPJPY is fluctuating near 154.70.

USD

The dollar index which measures the greenback against a basket of major currencies was almost unchanged near 91.80. The Federal Reserve officials diverged in views regarding the policy path. Some are eager to taper asset purchases sooner to combat inflation, while others are preferring to wait to avoid any disruption to the economic recovery. A series of economic indicators will come out today and tomorrow, among them the final reading of the first-quarter GDP, the initial jobless claims, and the PCE Index. An upside surprise on the latter could trigger a dollar rally, as it will raise the chances of the Fed acting earlier than anticipated.

Equities

Futures tied to major US stock indices traded in a narrow range, as investors await further fundamental drivers. The market continued to digest the Fed officials' different points of view on the monetary policy. Meanwhile, the US Treasury secretary Janet Yellen supported further fiscal stimulus packages as long as borrowing costs are low. The economic recovery continues and the US is heading for the fastest recovery in the Real GDP in decades. The Dow Jones Industrial Average futures hovered near 33870, the S&P500 futures inched higher to 4243, and the Nasdaq futures advanced to 14311.

Metals

Precious metals prices traded in the wider range as investors hold mixed views. Is rising inflation good for gold or not? Will the Federal Reserve act or Gold could be the savior against inflation? These are the questions that investors lack answers to, and only economic indicators and time have the answer. The price of a gold ounce rallied to $1795, but failed to hold gains, and went back again to $1772. The price of a silver ounce faltered at $26.30, and dropped to $25.95, while palladium recovered to $2624.

Oil

Oil prices extended their upside rally, trading at elevated levels. The economic recovery is boosting oil demand, with producers keeping a plan on limited supply, and inventories are running out. Market participants will focus on the OPEC+ meeting next week to have more insight into the market supply. Meanwhile, the US Energy Information Administration reported a decline of 7.614 million barrels in US inventories. The West Texas Intermediate crude August contract is trading near $73.44, and the Brent blend August contract is hovering near $75.55.

Major Economic Events

GMT Country Event Expectation Previous

8:00

EZ

 German Ifo Business Climate Index (Jun)

100.6

99.2

11:00

UK

BoE Interest Rate Decision (Jun)

0.10%

0.10%

11:00

UK

 BoE QE Total (Jun)

875

875

12:30

US

 Core Durable Goods Orders (MoM) (May)

0.8%

1.0%

12:30

US

 GDP (QoQ) (Q1)

6.4%

4.3%

12:30

US

 Initial Jobless Claims

380

412

 

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