The royal currency awaits its sentence
#GBPJPY
Key zone: 195.00 - 196.00
Buy: 196.50 (after a retracement to 195.50); target 198.50-200.00; StopLoss 195.70
Sell: 195.00 (on a strong negative foundation); target 193.00; StopLoss 195.70
The UK exited Trump’s tariff games in a better position than the Eurozone. Still, the pound had a rough month, losing nearly 3%, and sentiment around it remains bleak.
The market expects the Bank of England to cut the rate tomorrow by 0.25% — from 4.25% to 4.00%. These forecasts almost always materialize, as the regulator starts sending signals long before the announcement. Speculators usually take profits early, making the actual publication and press conference uneventful.
Now the situation is anything but clear. Neither Andrew Bailey nor his colleagues have made statements recently that would hint at a rate cut. Some monetary committee members have spoken about readiness for easing, but the market doesn’t seem to hear them. Moreover, in June the BOE governor questioned the logic of further easing and had previously forecast inflation to rise.
July’s services PMI came in significantly above expectations — a strong argument in Bailey’s favor.
But the overall macro background is, to put it mildly, awkward: labor demand is slowing (companies cite rising costs, including higher social contributions), and June’s CPI showed acceleration in both headline and core measures.
This creates a market trap for the BOE: too cautious a policy cut amid persistent inflation will test the regulator’s willingness to tolerate weak economic growth. In this case, a prolonged tight flat range is the optimal GBP scenario until Bailey’s press conference and fresh forecasts.
At the moment, the market sees no clear argument for a rate cut tomorrow. It may happen, but the vote will likely be narrow — something like 5 to 4. That means the regulator’s decision won’t change the broader market mood.
Of course, the pound might drop in the moment, but in the long term it will have to rebound due to broader global factors.
For those willing to trade in high volatility — the GBP/JPY cross looks promising. Its technical setup calls for urgent correction, and there’s a decent chance to profit off the British traders.
So we act wisely and avoid unnecessary risks.
Profits to y’all!
