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This Week: GBPUSD awaits Fed vs. BOE policy clues

Central banks on either side of the pond are fully expected to each trigger a75-basis point hike this week. However, it’s the latest clues about the paths ahead for their respective benchmark rates that could trigger a big move in GBPUSD.

Here are the scheduled economic data releases and events for the coming days:

Monday, October 31

  • JPY: Japan September industrial production, retail sales, October consumer confidence
  • AUD: Australia September retail sales, October inflation
  • CNH: China October PMIs
  • EUR: Eurozone 3Q GDP and October inflation, ECB Chief Economist Philip Lane speech, Germany September retail sales
  • Brent: OPEC releases 2022 World Oil Outlook

Tuesday, November 1

  • AUD: Reserve Bank of Australia policy decision
  • CNH: China October Caixin manufacturing PMI
  • GBP: UK October manufacturing PMI (final)
  • CAD: Canada October manufacturing PMI (final)
  • USD: US October manufacturing PMI (final), ISM manufacturing

Wednesday, November 2

  • NZD: New Zealand 3Q unemployment rate
  • JPY: Bank of Japan September meeting minutes
  • EUR: Eurozone October manufacturing PMI (final); Germany September external trade and October unemployment
  • USD: FOMC rate decision
  • US crude: EIA weekly oil inventory report

Thursday, November 3

  • AUD: Australia September external trade, October PMIs (final)
  • CNH: China October composite and services PMIs
  • EUR: Eurozone September unemployment, ECB President Christine Lagarde speech
  • GBP: Bank of England rate decision
  • USD: US weekly initial jobless claims, October ISM services index

Friday, November 4

  • EUR: Eurozone September PPI, Germany September factory orders, ECB President Christine Lagarde speech
  • USD: US October nonfarm payrolls, Boston Fed President Susan Collins speech
  • CAD: Canada October unemployment rate


The much-anticipated FOMC meeting takes place on Wednesday with markets fully expecting the world’s most powerful central bank to deliver yet another jumbo-sized 75bp interest rate increase, the fourth in a row of this size.

This will take the amount of hikes to a total of 375bps in the current cycle, which in itself is a strong argument for taking stock of the situation.

The market is desperate for any hints of a Fed pivot; that is a slowing down in the pace of rate hikes, even if the FOMC is not ready to stop hiking.

That does seem highly unlikely at this stage, so Chair Powell’s tone in the press conference will be critical for market direction. If he remains hawkish, then the recent stock rally will evaporate, and the dollar should regain some lustre.

Less than 24 hours after the Fed policy decision is made known, as well as Fed Chair Powell’s presser, then comes Thursday’s Bank of England (BOE) meeting.

A mega-1% hike by the BOE is now out of the question after the new UK government leadership ditched the previous “mini-budget” plans.

A heavily divided MPC will now make a decision with an expected boost from fiscal policy now similar to what was expected before the September meeting. With GBP now stronger too and the latest data not providing a clear need for an unprecedented jumbo-sized hike, might the Old Lady surprise with just a half point hike?

This would see GBP/USD retreat to the support zone around 1.14 which includes the pandemic low and 50-day simple moving average.

On the other hand, should the BOE manage to out-hawk the Fed, that could see “cable” (the nickname given to GBPUSD) testing its immediate resistance level around 1.175, also around where its 100-day SMA currently lies.

This Week: GBPUSD await Fed vs. BOE policy clues

Ultimately, the more hawkish sounding of the two central banks should invoke more strength in its currency.

Such a lens should dictate cable’s (the nickname for GBPUSD) performance in the immediate aftermath of this week’s major monetary policy decisions.



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