The Monetary Policy Committee (MPC) of the Bank of England is going to meet later this week and is expected to maintain the interest rate unchanged at its current level of 0.75 per cent.
The MPC is hardpressed to make tough economic decisions in exceptionally volatile international conditions and ongoing Brexit woes, coupled with heightened political uncertainty in the United Kingdom.
Inflation tumbled by 0.4 percentage points in September to 1.7 per cent, which is the lowest inflation level since December of 2016.
UK Inflation Rate. Image source: TradingEconomics.com
Additionally, a marginal increase in unemployment and significant deterioration in the GDP growth rate have been recorded during the same period. If this trend of continued subdued growth is preserved, the MPC might be compelled to cut the rate by the end of the year.
UK Growth Rate. Image source: TradingEconomics.com
The upcoming general election next month is also going to impede the political stability in the country, which could have further consequences for the already shaken investors’ confidence.
The GBPUSD is likely to wipe out last week’s gains, as the price appears to have found a significant resistance from the fundamentally important 1.30000 price level.
The pair is currently trading at around 1.29240, and our projections are for the price to tumble to the 23.6 per cent Fibonacci retracement at 1.28131, following Thursday's interest rate decision.
GBPUSD 4H Chart. Image source: Trendsharks ©, created with TradingView.com
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