Yesterday, sterling rose sharply against the USD after the Brexit minister said that a deal with the EU will likely be ready by November 21st. This was a broad pledge that he was forced to take back. This is because of the complexity of the ongoing Brexit negotiations. In October, the hope was that the two sides will make a deal but this turned out not to be. The main challenge with the deal is that it will be resisted by conservatives who wanted a clean exit from the EU.
Today, the Bank of England (BOE) will deliver its monetary policy decision. At this time, traders expect the bank to leave rates unchanged. The most important part of the day will be the press conference by BOE Governor, Mark Carney. In the conference, will be asked about the status of the economy and the forward guidance on any rate hikes. In the previous conference, he said that the BOE was likely to leave rates unchanged until a clear path is seen about Brexit.
The recent data seems to suggest that more rate hikes will be necessary if the Brexit deal is made. The unemployment rate has continued to fall, the rate of inflation is already above the target of 2.0% and the general consensus is that the UK economy is doing well. The manufacturing sector has done well, mostly because of the weaker dollar. However, the UK stocks market has moved lower in line with the other markets. There are also concerns about trade and how a trade war will affect the country.
Yesterday, the GBP/USD reached the important low of 1.2700. This was an important support as shown below. After the optimism of Brexit, the pair jumped and today, it reached an intraday high of 1.2900. Today, the pair is likely to continue the upward trend if the BOE sounds hawkish. The outlook for November is that the pair will likely reach a high of either 1.3200 or even 1.3300.