FX.co ★ 04.08.2022: Bank of England unveils its meeting results. Outlook for EUR/USD and GBP/USD

04.08.2022: Bank of England unveils its meeting results. Outlook for EUR/USD and GBP/USD

Today, currency market traders have focused on the BoE’s meeting results. The regulator was expected to raise the benchmark rate by 50 basis points.

The predictions came true. The key interest rate was hiked to 1.75%. It is not only the sixth rise in a row, but it is also the sharpest one since 1995. The local monetary authorities are deeply preoccupied with high gas prices, which have a negative influence on the income of ordinary people and consumption. According to the central bank’s forecasts, inflation will go on surging. By October, it may reach 13.3%. It will need about two years to hit the targeted level of 2% per annum.

Under the existing conditions, the pound sterling dropped against the US dollar. The number of short orders increased and pushed the price to 1.2100. The pair will have a chance to resume rising only if it consolidates above 1.2200.

Meanwhile, the pound/dollar pair slowed down near the lower limit of the sideways channel at 1.0150/1.0270. As a result, the pair began consolidating, forming various candlesticks like Doji. Analysts consider the pause to be an accumulation process.

The strategy based on a rebound from the limits of the range could still be used. Notably, the pair may soon finish the formation of the sideways channel.

In this case, the main strategy will be based on a breakout from this channel. Traders will receive a sell signal if the price settles below 1.0100 on the four-hour chart. According to this scenario, the pair may touch a parity level again. To continue the upward correction, the euro/dollar pair should return to the higher limit of the range and then consolidate above 1.0300. If this prediction comes true, a breakout strategy will allow traders to create a new upward momentum, which may give a signal of a further correction.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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