Will the Bank of England Push the Pound Lower?

British pound depreciated against the US dollar

The British pound (FXB) depreciated 0.95% against the US dollar (UUP) for the week ending June 15 and closed at 1.33. The pound took a backseat as the US and European central bank policy meetings dominated the forex space last week. The economic data from the United Kingdom in recent weeks added to the pound’s weakness.

British equity markets (BWX) posted the fourth consecutive weekly loss in the last 12 weeks, which reflected the global risk-off sentiment. The FTSE 100 Index (EWU) depreciated 0.61% for the week ending June 15 and closed at 7,633.91.

Will the Bank of England Push the Pound Lower?

Speculators decreased their bullish positions

According to the latest Commitment of Traders report released on June 15 by the Chicago Futures Trading Commission, speculators increased their overall bullish positions on the British pound (GBB) by 3,624 contracts in the previous week. The total outstanding net long contracts increased from 7,345 contracts to 10,969 contracts to as of June 12.

What to expect this week

The Bank of England’s policy meeting will likely be the key driver for the British pound. No policy changes are expected at this meeting. As a result, there won’t be a press briefing or an update about projections. Any hope for an August rate hike was decimated after the weak inflation and jobs report in May, which pushed the next rate hike possibility to October. Any news surrounding Brexit will likely impact the pound, especially before the European Union-UK summit on June 28–29. Overall, there aren’t many positives for the pound this week. The price action could depend on the forex markets’ volatility.