“Bank of England gives traders reason to buy back into the Pound.”

Due to my travel commitments today flying from California to Portugal I am sorry I will not have the opportunity to host Friday Live. I will be sending through my regular Sunday Forex Pre-Market Prep Video so please keep an eye out for it on Sunday via your Trade Time App.

The Pound surged on Thursday following an increase in the vote for a Rate hike at the latest Bank of England June policy meeting. The vote was 6/3 in favour of keeping rates on hold, however, there is now an increasing number of BOE committee members calling for a rate hike and it was agreed by the committee that rate increases will shortly be needed albeit at a gradual pace. The market quickly bought back into the Pound pushing it sharply higher and the question now is, will that buying momentum continue. The market is currently pricing in an August rate hike even though economic data suggests inflation and economic growth is still struggling. First quarter growth in the UK was really non-existent however the BOE does anticipate growth and inflation to pick up in the second half of 2018 and this is another reason why traders have bought back into the Pound. My pending buy stop order on the GBP v AUD has been triggered as a result of the more hawkish tone from the BOE and with US stock indexes currently falling (Dow Jones down 150 points at midday New York time) this is helping put downward pressure on the Aussie Dollar and emerging market currencies. Safe haven currencies such as the Yen and Swiss Franc continue to benefit from the risk-off trading mood across financial markets.

The Kiwi Dollar dipped yesterday after first quarter GDP failed to beat the market’s estimates. Growth in New Zealand rose by 0.5% in the first quarter or annualised at 2.7% which gave traders reason to believe the RBNZ will leave rates on hold through 2018 and well into 2019. The Kiwi Dollar did regain most of the losses through the European and US trading sessions (perhaps in celebration of the New Zealand PM’s new baby), however, any rally I suspect will be short-lived and the overall selling pressure will continue throughout 2018 as interest rate divergence between the US Fed and RBNZ grows.

So here are the major themes in financial markets right now.

1. China and US trade tensions continue to simmer and this is the overwhelming concern for traders and is the reason why stock indexes are falling and the traditional safe-haven assets are being bought higher. What will China do in response and will the current increase in tariffs from the US increase the likelihood of a global trade war? Those two questions remain unresolved and until they are the market’s mood will likely remain negative.
2. The Bank of England as mentioned above will raise the official cash rate in coming months so I anticipate any pull back on the Pound in coming weeks to be seen as a buying opportunity.
3. OPEC is meeting in Vienna Thursday and Friday this week and a decision on Oil supply will be made. Saudi Arabia and Russia want to increase supply, however, Iran has recently indicated it is against a supply increase although fresh reports today suggest they may be swayed to agree to an increase. Volatility will increase on the Canadian Dollar as a result of the decision from OPEC.

Looking at the economic calendar for Friday it shows European manufacturing data set for release as well as Canada’s monthly inflation figures which isn’t likely to overshadow OPEC’s decision with respect to Oil production.

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About the Author: Andrew Barnett

Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular keynote speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).

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The post Today’s Key Market Drivers: 22nd June 2018 appeared first on LTG GoldRock.