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BOE rate decision and minutes preview: What to expect in GBP/USD?

FXStreet (Mumbai) - The GBP/USD has taken out the weak resistance of the 200-DMA at 1.5318 earlier today to trade around 1.5340 ahead of the Bank of England rate decision and minutes release.

BOE minutes to carry a cautious tone

The BOE is widely expected to keep the interest rates unchanged today, while the BOE monetary policy committee vote split on the interest rate is seen remaining unchanged at 8-1. Meanwhile, the minutes could carry a cautious ton; courtesy of the China/EM and global growth slowdown, drop in the UK exports, and slowdown in the service sector activity.

Moreover, the sharp drop in the Fed rate hike bets means there is little scope left for the BOE to remain as hawkish as it was a few months back. The possibility of ECB expanding its QE program has increased as well. Therefore, the hawks at the BOE have little room left to signal a rate hike possibility.

The surprise, if it has to come, could be a dovish one in the form of a unanimous vote in favour of keeping rates low. The BOE may also chose to remove the words - “rates could rise at the turn of the year” from its interest rate forward guidance.

GBP/USD Technical Levels

At 1.5340, the pair faces immediate resistance at 1.5380 (weekly 50-MA), above which the spot may run into offers at 1.5409 (38.2% of Apr-Jun rally). If the offers are taken out at one go, the pair could easily extend the rally 100-DMA at 1.5485, however, this looks possible in case the BOE maintains its hawkish stance or the MPC vote split prints at 7-2. On the other side, a cautious tone of the minutes could push the pair below 1.53, under which the pair could target 1.5248 (50% of Apr-Jun rally). A dovish surprise could send the pair down to 1.5170 (June 1 low).

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