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Cable coils near lows ahead of Fed and BoE rate decisions

By Capital.com News

14:16, 19 September 2023

Any material provided is for information purposes only and is not investment advice. Any opinions that may be provided are not a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided. If you rely on the information on this page then you do so entirely on your own risk.

It’s a big week for Cable (GBP/USD) as both the Federal Reserve and the Bank of England are set to make crucial rate decisions.

The action begins on Wednesday with Fed Chair Jay Powell widely anticipated to keep rates unchanged at 5.5%.

On Thursday, attention shifts to Andrew Bailey's announcement at the BoE, where some uncertainty looms…

There is a possibility of a 25 basis point rate hike (Reuters), but the BoE's decision will be influenced heavily by the UK inflation figures released the day before the Monetary Policy Committee convenes. These figures are expected to show a slight uptick in the headline rate compared to the previous month.

On the price chart, cable is coiled and consolidating near recent lows. The daily candle chart (below) shows that cable has been trending lower for the last two months and this week’s price action has seen the pair tread water in anticipation of the key data releases.

Yesterday’s daily range was the smallest we’ve seen in over seven sessions and this narrow consolidation has a tendency to precede explosive directional price action.

GBP/USD Daily Candle Chart

XRP/USD

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Short position overnight fee 0.0069%
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BTC/USD

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ETH/USD

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Short position overnight fee 0.0137%
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Spread 6.00

snapshot

If we drop down a timeframe and zoom into cables 4hr candle chart, we can see that this week’s consolidation has formed a bearish descending triangle pattern.

This pattern signals trend continuation and traders will be watching the pattern lows as a trigger for potential short positions.

GBP/USD 4hr Candle Chart

snapshot
Risk management

Central bank rate decisions and inflation data releases have a tendency to cause outsized volatility. Traders should factor this risk into their position sizing, stop placement and trade plan.

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Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

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