In the Bank of England's monetary policy report this Thursday, analysts expect policymakers to remain less hawkish as concrete dates for rate hikes are still not decided. Broadbent's stance on inflation is the same as in the United States: inflation is transitory and will not last as the economy continues to recover. He also said that the current rise in inflation is coming from the higher oil prices that were expected to keep rising going into 2022.
Pound is preferred in risk-on pairs and not preferred in risk-off pairs. Analysts say the market is pricing in the rate hikes already even though there are no set dates yet.
Brexit problems have also contributed to the supply of goods and labor shortages in the UK. With the expectation of not raising interest rates, investors are moving away from the pound and to safer currencies like the yen or the franc.
I am mostly bullish on the pound this week, but it depends on the pairs. GBP looks weaker against pairs that are more risk-off like USD, JPY and CHF. So I might be looking at the short side of these pairs. However, against CAD, AUD and EUR, I would be looking to be long on the pound.
EURGBP on support right now and looks like it wants to bounce back. If so, the pair could retest the falling trend line for resistance. If price falls under current support, it could drop all the way down to a double bottom around .85045 on the 4H chart.
GBPCAD looks like it's breaking out of a wedge on the 4H timeframe, and a continued run could take the pair up to a top around 1.74949 or even higher at 1.7560.
GBPJPY could be bouncing off support here on the 4H chart, but behavior has been relatively weak in terms of price action in the last couple months. A long term falling trend line seems to be keeping price from breaking up while lower highs and lows are forming.
GBPAUD looks strong against the Aussie buck amid their militarized lockdown in Sydney. The pair continues to find support on a rising trend line on the 4H chart. There is also support around 1.87569 should price fall.
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