27 April 2022, GBP/USD
GBPUSD trading plan:
The Bank of England looks set to take its first steps next week towards selling some of the 875 billion pounds of government bonds it amassed between 2009 and 2021, leading markets into uncharted territory. Traders believe the BoE, seeking to prevent the recent jump in inflation from becoming a long-term problem, will raise its main interest rate on May 5 to 1%, the level at which it has said it will be "considering beginning" outright bond sales. Its main aim is simply to reduce the size of the gilt holdings - which have reached a scale that could limit its room for manoeuvre during future downturns - and it thinks the broader economic impact will be limited. However, with consumer price inflation at 7% in March and heading higher, an early start to gilt sales would help the BoE show it is serious about bringing price rises under control.
Investment idea: sell 1.2600 and take profit 1.2540.
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