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EUR/GBP binary signal - BoE Meeting - 15 June 2017

Signal details
Entry Price: 
0.8807
Close Price: 
No trade
Direction: 
High
Expiry Time: 
20:00 GMT
How we trade
5/5 of 4 ratings

The Bank of England will be meeting today for its monetary policy meeting. According to economists polled, the central bank is expected to leave interest rates unchanged at today's meeting. The UK benchmark interest rate remains at 0.25%, which is a historic low. The central bank is also expected to leave its asset purchase program steady at 435 billion British pounds.

Despite no changes to monetary policy, the BoE is expected to take a dovish stand on the economic situation in the UK as it tries to steer through the political uncertainty and the Brexit talks. In the UK, there is still no clear government being formed. This suggests that bringing more uncertainty to the markets will be disastrous for the British pound.

Earlier this week, data from the UK showed that inflation continued to rise. In May 2017, consumer prices rose 2.9%. This is just below 3% which is a full 100 basis points above the BoE's inflation target rate. The rise in inflation came from a broad based which suggests that inflation is likely to firm in the near term. While inflation has been steadily rising and beating forecasts, wages haven't.

The latest labor market statistics from the UK showed that average wages rose just 2.1%, slower than the previous three month's decline of 2.3%. While wages have been falling, prices have been rising. This suggests a strong squeeze on household spending in the UK.

The BoE previous flagged the downside risks of such a scenario which is playing out. As a result, today's dovish BoE meeting is likely to weigh on the British pound. Therefore, today's binary options trade recommendation is EURGBP.

We suggest purchasing daily CALL options at 0.8807 where price action is currently consolidating. A dovish BoE is likely to send the EURGBP to close higher on the day.

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. He has no business nor personal relationships with any mentioned government entities or stocks. 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.