Mark Carney’s Speech in Focus as BOE Hints a Rate Cut Sooner than Expected

The GBP lost ground against major currencies this week as markets have increased expectations for a rate cut from the Bank of England after its Governor Mark Carney signalled an interest rate cut to cushion the economic impact of Coronavirus outbreak.

Investors will be keeping a close eye on Mark Carney’s speech on Thursday as the outgoing Governor will be giving some important clues about the Bank of England’s interest rate policyHe did not rule out an interest rate cut before the MPC’s next meeting scheduled for March 26. Carney said that the economic impact of coronavirus outbreak could be huge and it could hit companies’ cash flow and the balance sheet of Banks. Markets are already pricing in a strong case of a rate cut this month as the GBP lost value against major currencies.

Coronavirus has already killed more than 3,000 around the world and the number of confirmed cases crossed 95,000. The economic impact of the COVID-19 could be much higher than anticipated. Under these uncertain circumstances, GBP investors will be hoping to get clarity over BOE’s interest rate decision. GBP investors reacted negatively on the interest rate news as GBPUSD dipped below 1.28000. EURGBP jumped above the key level of 0.87000 this week to reach the highest level since October 2019 while GBPJPY remained below 138.000

On the technical side, GBPUSD on the 4-Hour timeframe has been following a downtrend since February 25. The price registered the lowest level of the period under study at 1.27256 on February 28. As of writing, the GBPUSD is hovering around 1.28070 with negative Moving Average Convergence Divergence and Momentum below the 100 level. The pair is currently trading below the 50-period simple moving average with Relative Strength Index below 50 which supports the recent bearish price move. Resistance level lies at 1.30158 while the support level lies at 1.27256. Bears are trying to push the price below the 1.28000 level, but a close above 1.29000 could strengthen the argument for a bullish move.

Written on 05/03/2020 by Bilal Jafar, FX Trainer at FXTM

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