Cable has fallen to a record low of around 1.1413, slipping far below levels seen since the 2007 financial crisis. Prices have since retraced slightly, bolstered by greater risk appetite and anticipation of the BOE’s monetary policy decision today.
Cable has upheld the long term weekly blue trendline support outlined in the chart above. There has also been a bullish engulfing candlestick close above the trendline support, confirming its validity. The price is now retesting the 8-day EMA, a successful close above this is likely to see a further push to the previous low on the trendline support at 1.200. Expect volatility to be high during today’s BOE monetary policy decision and conference.
Market participants are eagerly waiting for todays Bank of England monetary policy decision.
The BOE have already cut rates twice in emergency meetings, with rates now sitting at 0.10%. It is unlikely rates will be cut again however the BOE may decide to follow in the footsteps of the FED and cut rates to 0%.
Boris Johnson’s approach to COVID-19 has been remarkably slow, and thus the risk of widescale spreading of the virus remains high. Despite initiating a lockdown this week, underground train services remain heavily congested and many people can still be seen out on the streets.
The worst for the UK is still to come and as a result, downside risks remain greater than upside for now.