Following hot on the heels of yesterday’s important Bank of Japan and Federal Reserve interest rate decisions, today sees the Swiss National Bank and Bank of England announcements in focus.
While the outcome of the SNB meeting will still be relevant for FX markets, in today’s post we will be taking a deeper look at the potential impact of the BoE decision on the direction of GBPUSD, which hit 5 month highs at 1.3015 earlier this morning, and the UK 100, which has recovered well from its dip to 8464 on March 11th .
Bank of England Meeting:
First up, market expectations are for the UK central bank to remain unchanged at this meeting due to the current uncomfortable levels of inflation and strong wage growth, however, with growth in the UK economy hard to come by, this could be a closer decision than anticipated.
With that in mind, based on a no change decision later today at 1200 GMT, traders may decide to focus on the breakdown of the MPC committee vote to determine how close to a rate cut at this meeting they were, and to help inform whether the expectation of cuts later in the year is closer to becoming a reality.
Market pricing is currently indicating around 2 25bps (0.25%) cuts across the rest of 2025, but could that move closer to 3 25bps cuts?
This all will have implications for the direction of GBPUSD and the UK 100, and below we look at what the technical backdrop looks like.
Technical Outlook for GBPUSD:
GBPUSD has seen a strong advance since the January 13th 2025 session low at 1.2100, a move that has reflected positive sentiment, as an uptrend pattern of higher highs and higher lows has formed.
This price strength has seen immediate resistance levels give way, including the December 6th 2024 failure high at 1.2811, the break of which has been the catalyst for this latest extension of price strength.
Going into today's BoE decision, GBPUSD prices have moved close (1.3015 today's high so far) to the next potential resistance level at 1.3048, which marks the November 6th 2024 session high, and a level that traders may now be focusing on.
While much will continue to depend on future price trends and sentiment, breaks of this 1.3048 level may open potential for a move towards the October 15th 2024 high at 1.3103, possibly further.
What If 1.3048 Resistance Holds Current Price Strength?
Failure to breach the 1.3048 high could reflect an inability of recent buyers to maintain the positive trend to higher levels, and could even suggest a price correction back to the downside is possible.
In this situation, a support focus may be 1.2938 (half recent upside move from 1.2861), with breaks below this level skewing the potential towards a more extended setback towards 1.2836, which is the 38.2% Fibonacci retracement of the February 28th to March 20th 2025 advance.
Technical Outlook for FTSE 100 Index:
Early March 2025 saw the FTSE 100 index retreat 5% in just 7 trading sessions (between 8911 March 3rd high to 8464 March 11th low) as a possible unwinding of over-extended upside price extremes developed. However, buyers were again found above 8424, the January 27th 2025 low, from which the latest price strength has been seen.
This upside move is now nearing what might prove to be an important resistance level at 8741, marked by the 61.8% Fibonacci retracement of the March price sell-off. How this level is defended on a closing basis might suggest the next directional themes, with successful closing breaks higher opening the possibility for a more extended phase of price strength towards 8911, the March 3rd 2025 high.
What if 8741 Resistance Holds This Price Strength?
While the 61.8% retracement at 8741 isn’t a guaranteed area where sellers might be found, if it does manage to cap the upside then traders may start to watch how well support at 8629, which is the 38.2% retracement of March strength, holds any sell off. Closing breaks below this level may suggest a deeper phase of weakness.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
While the outcome of the SNB meeting will still be relevant for FX markets, in today’s post we will be taking a deeper look at the potential impact of the BoE decision on the direction of GBPUSD, which hit 5 month highs at 1.3015 earlier this morning, and the UK 100, which has recovered well from its dip to 8464 on March 11th .
Bank of England Meeting:
First up, market expectations are for the UK central bank to remain unchanged at this meeting due to the current uncomfortable levels of inflation and strong wage growth, however, with growth in the UK economy hard to come by, this could be a closer decision than anticipated.
With that in mind, based on a no change decision later today at 1200 GMT, traders may decide to focus on the breakdown of the MPC committee vote to determine how close to a rate cut at this meeting they were, and to help inform whether the expectation of cuts later in the year is closer to becoming a reality.
Market pricing is currently indicating around 2 25bps (0.25%) cuts across the rest of 2025, but could that move closer to 3 25bps cuts?
This all will have implications for the direction of GBPUSD and the UK 100, and below we look at what the technical backdrop looks like.
Technical Outlook for GBPUSD:
GBPUSD has seen a strong advance since the January 13th 2025 session low at 1.2100, a move that has reflected positive sentiment, as an uptrend pattern of higher highs and higher lows has formed.
This price strength has seen immediate resistance levels give way, including the December 6th 2024 failure high at 1.2811, the break of which has been the catalyst for this latest extension of price strength.
Going into today's BoE decision, GBPUSD prices have moved close (1.3015 today's high so far) to the next potential resistance level at 1.3048, which marks the November 6th 2024 session high, and a level that traders may now be focusing on.
While much will continue to depend on future price trends and sentiment, breaks of this 1.3048 level may open potential for a move towards the October 15th 2024 high at 1.3103, possibly further.
What If 1.3048 Resistance Holds Current Price Strength?
Failure to breach the 1.3048 high could reflect an inability of recent buyers to maintain the positive trend to higher levels, and could even suggest a price correction back to the downside is possible.
In this situation, a support focus may be 1.2938 (half recent upside move from 1.2861), with breaks below this level skewing the potential towards a more extended setback towards 1.2836, which is the 38.2% Fibonacci retracement of the February 28th to March 20th 2025 advance.
Technical Outlook for FTSE 100 Index:
Early March 2025 saw the FTSE 100 index retreat 5% in just 7 trading sessions (between 8911 March 3rd high to 8464 March 11th low) as a possible unwinding of over-extended upside price extremes developed. However, buyers were again found above 8424, the January 27th 2025 low, from which the latest price strength has been seen.
This upside move is now nearing what might prove to be an important resistance level at 8741, marked by the 61.8% Fibonacci retracement of the March price sell-off. How this level is defended on a closing basis might suggest the next directional themes, with successful closing breaks higher opening the possibility for a more extended phase of price strength towards 8911, the March 3rd 2025 high.
What if 8741 Resistance Holds This Price Strength?
While the 61.8% retracement at 8741 isn’t a guaranteed area where sellers might be found, if it does manage to cap the upside then traders may start to watch how well support at 8629, which is the 38.2% retracement of March strength, holds any sell off. Closing breaks below this level may suggest a deeper phase of weakness.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.