GBP/USD as confined to a fairly narrow range on Friday, as well as most of the week last week. If anything it trended ever so slightly higher on Friday following the release of weaker than expected USD Q2 GDP and the resulting sell off in the greenback. Like Thursday, there was no UK economic data released.
It’s a pretty quiet start to this week as far as data goes, too. It isn’t until Wednesday that we get UK Manufacturing PMI. Then on Thursday, arguably the most anticipated UK market event of the week/month/quarter falls due; the Bank of England make their monetary policy announcement. Expectations are for the central bank to raise the base rate from 0.5% to 0.75%, and as it’s not fully priced in we’re bound to see some volatility in GBP/USD following the announcement i.e. some upside if the bank hike and some downside if the bank hold, so the theory should go. Investors and traders will also be paying close attention to Governor Carney’s comments following the bank’s interest rate announcement too. If the bank hike, and he sounds dovish on future monetary policy, and upside in GBP/USD may be limited. If they don’t hike, and he takes a similarly dovish stance, then there’s a chance we may see a move on the 1.30 big figure. So the risk is to the downside, as they say.