FX Trading

British Pound Volatility Ahead on Bank of England Rate Decision

Fundamental Forecast for British Pound: Neutral

- Technical Positioning Hints Pound to Reverse Lower vs US Dollar

- Rates Outlook Key as British Pound Clings to UK-US Libor Spread

The British Pound may turn volatile in the week ahead as the Bank of England delivers the first rate decision based on an updated inflation outlook taking into account the government’s austerity budget.

• Dollar Ends Flat As Strong Manufacturing and Consumer Sentiment Data Offset Slower Pace of Growth

• Euro to Face Whipsaw Price Action Ahead of ECB Rate Decision

• British Pound Ends the Week as the Second Best Performing G10 Currency Against U.S. Dollar

• Canadian Dollar Remains Bounded by Narrow Range as GDP Expands in May

• Japanese Yen Extends Rally as Traders Seek Flight to Safety

Formation of a US Dollar low is proving elusive. It is best to stand aside and wait for the bottoming scenario to play out.

Formation of a US Dollar low is proving elusive. It is best to stand aside and wait for the bottoming scenario to play out.

The Euro crosses are mixed while the Yen crosses show signs of topping.

The Euro crosses are mixed while the Yen crosses show signs of topping.

The Euro pulled back on Friday and slipped to a low of 1.2980 during the overnight trade as investors scaled back their appetite for risk, and the shift in mark sentiment could lead the EUR/USD to retrace the advance from earlier this week as the economic docket is expected to show the world’s largest economy expanding at a slower pace in the second quarter.

The EURUSD is vulnerable. Dropping below the short term channel (wave v of C) would suggest that a top is in place.