Booking Profit on EUR/GBP After BOE Sends GBP Higher

September 24, 2021

732

The downtrend resumes for EUR/GBP

Profit on EUR/GBP; Yesterday, we decided to sell EUR/GBP, as the Euro was turning bearish, especially after the FED meeting, while the GBP was stalling after the decline. Yesterday the FED announced the beginning of the taper process in December, while today, the Bank of England (BOE) kept the policy unchanged, but the member votes for the monthly gilt purchases declined from 8 to 7, while two members dissented.

EUR/GBP retraced higher earlier this week, but yesterday, it formed an upside-down hammer candlestick, which is a bearish reversing signal, and today, this forex pair tumbled lower. So, we booked profit, as the BOE is starting to turn hawkish. Below, you can see the BOE decision and statement.

BOE announces its September monetary policy decision – September 23, 2021

BOE leaves bank rate unchanged at 0.10%, as expected
Prior meeting 0.10%
Bank rate vote 9-0

Gilts purchases £875 billion
Corporate bond purchases £20 billion
Total asset program £895 billion (unchanged)

Profit on EUR/GBP; Gilts purchases vote 7-2 (Saunders and Ramsden dissented)

UK Q3 GDP expectations revised down by around 1% since August
The downward revision reflects the emergence of supply constraints on output
Estimate of underlying pay growth has picked up, to above pre-pandemic rate
Uncertainty around labour market outlook has increased
Questions on how things will be after furlough program ends at the end of Sept
BOE will deliberate said developments in November
Inflation to rise further in near-term, to slightly above 4% in Q4
Central expectation is that current elevated cost pressures will prove transitory
Existing stance of monetary policy remained appropriate
Full statement