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EUR/GBP binary signal - BoE Interest Rate Decision - 11 May 2017

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Entry Price: 
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Expiry Time: 
20:00 GMT
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It is a busy day for the British pound with the Bank of England's monetary policy meeting lined up alongside the UK's manufacturing and industrial production numbers. Needless to say, volatility in the British pound currency pairs will increase ahead of the "Super Thursday" event.

Starting with the manufacturing production numbers, economists polled are forecasting a 0.2% decline for March. This comes after manufacturing production fell 0.1% in February. Industrial production is also expected to remain weaker and is expected to fall 0.4%, extending the declines from February's 0.7%.

While the data is important, it is unlikely to have a big impact considering that the BoE's meeting is scheduled for later in the day. No changes to interest rates are expected at this month's meeting with the BoE leaving the key lending rates unchanged at 0.25% and the asset purchases steady at 435 billion GBP.

The central bank is likely to come out neutral ahead of the British elections in June. The Bank of England will also be releasing the quarterly inflation forecasts and economic projections. There is a possibility that the forecasts for inflation could be upgraded, but GDP growth could remain muted.

The British pound is likely biased to the downside risks considering that the currency has posted strong gains last month following the announcement of the snap elections last month. While it initially stoked a rally in the GBP on prospects that the UK could be heading for a soft Brexit, the rally looks to be overstretched currently.

EURGBP posted a doji candlestick on the daily session yesterday and this could signal a near term pull back in prices. Therefore, for today's binary options trading signal, our recommendation is to purchase daily CALL options in EURGBP at 0.8400 for a 20:00 GMT expiry time.

The euro, which has been trading weaker, is showing signs of strength across the board against a weaker U.S. dollar. This indicates some upside potential especially in EURGBP given that the political headwinds have dissipated for the moment.

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion. All risks and coasts associated with online trading are your responsibility.