FX.co ★ Global macro overview for 22/06/2018

Global macro overview for 22/06/2018:

The Bank of England leaves the rates unchanged, but pressure to hike increases.

The key interest rate of the Bank of England was maintained at 0.5% in line with expectations. It is a surprise, however, that Haldane joins McCafferty and Saunders and vote for a 25 bp increase, so Haldane joined the "full-time BoE hawks". The statement said that "most MPC members think that the weakness of the first quarter was transitory, but it prefers to wait for more data from the economy". Haldane's voice is the main source of surprise as it strengthens market speculation about another hike at the next meeting in August.

The Bank of England in the statement after the decision changed the attitude regarding the asset purchase program. The bank assumes that it will not start reducing the portfolio of bonds purchased under QE until the interest rate reaches 1.5%. Previously, the condition was to raise the interest rate to 2%, so this change has another hawkish tone.

In conclusion, the change of point of view of BoE together with Saunder change of point of view from dovish to hawkish will all lead to further appreciation of British Pound across the board. The global investors wil now anticipate a rate hike rather sooner than later, possibly even at the next BoE meeting.

Let's now take a look at the GBP/USD technical picture at the H4 time frame. The market reaction is clearly bullish as a massive up candle is clearly visible at the H4 time frame as the market broke out of the Falling Wedge pattern. Currently, the price is testing the technical resistance at the level of 1.3292 - 1.3307 zone and the momentum is clearly pointing to the north. Any violation of this resistance zone will lead to another spike higher towards the level of 1.3340 - 1.3350. The immediate support is seen at the level of 1.3270.