STERLING REBOUNDS AHEAD OF THE BOE INTEREST RATE DECISION

The US dollar retreated while stocks wavered after the Federal Reserve delivered its interest rate decision. As was widely expected, the bank decided to leave its interest rate unchanged at the range of 0% and 0.25%. The dot plot showed that the bank will have 7+ interest rates by 2024. Meanwhile, the bank also decided to start tapering its asset purchases. It reduced its monthly asset purchases by about $15 billion. The decision came shortly after data by ADP showed that the private sector added more than 500k jobs in October.

The British pound held steady in the overnight session as investors waited for the upcoming Bank of England (BOE) interest rate decision. Economists expect that the BOE will announce the start of tapering of its asset purchases. Besides, while the country is going through challenges, it is still doing well. For example, data published on Wednesday showed that the house price index (HPI) and the services PMI rose in October. The BOE is also expected to leave its interest rate intact. Analysts will also watch the number of BOE members who will vote to hike rates.

The economic calendar will have several important economic events today. For example, in Switzerland, SECO will publish the estimated consumer confidence situation for the fourth quarter. This is an important assessment because it influences consumer spending. Meanwhile, Markit will publish the latest services and composite PMI numbers for October. Like in the UK, there is a possibility that the data will be relatively positive. In Canada, the statistics agency will release the latest trade numbers.

EURGBP

The EURGBP declined sharply ahead of the BOE decision. It moved to a low of 0.8475, which was the lowest level since Monday. This price was slightly above the key support at 0.8470, which was the neckline of the head and shoulders pattern. It remains above the 25-day and 50-day moving averages. Also, the pair is approaching the 23.6% Fibonacci retracement level. Therefore, the view is that the pair will rebound after the BOE decision.

XBRUSD

The price of crude oil retreated in the overnight session after the relatively weak US inventory build data. Inventories rose by about 3.6 million last week, which was higher than the expected 2.25 million. The pair declined to a low of 82.75, which was the lowest level since October 27th. It also moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has been in a downward trend. Therefore, the pair will likely keep falling for now.

EURUSD

The EURUSD pair wavered after the Fed decision. The pair is trading at 1.1590, which was slightly higher than the lowest level on Wednesday. Still, the pair is where it has been since Tuesday. It is along with the short and longer-term moving averages. The pair’s Average True Range (ATR) has also declined, which is a sign of low volatility. Therefore, the pair will likely remain in this range ahead of the US jobs data.