Pound plunged ahead of BOE meeting

Pound plunged ahead of BOE meeting

After the recovery session impressed due to the stable return of British politics as the country has a new prime minister, British pound yesterday plunged back before meeting result of Bank of England (BOE) will be announced today with the majority of analysts are predicting that the BoE will cut rates from 0.5% to 0.25% in this meeting.

However, Some analysts suppose that that cutting interest rates will be delayed until the August meeting. At present England is in the process of establishing a new government, policy makers at the BOE can to open policy until the statements related to Brexit are declared by the new government as well as impacts of Brexit for the UK economy are expressed more clearly. If BoE cut interest rates, pound will continue to plunge and set new lows. Otherwise, GBP/USD will have a strong recovery.

Canadian Dollar rose sharply yesterday after Bank of Canada (BOC) decided to keep interest rates at 0.5%. In the statement issued after the meeting, BOC expressed optimistic prospects for the Canadian economy as oil prices on world markets have rebounded. Besides, the agency said that the stability of US economy will support the growth of Canada in the remaining months of this year.

After the slowdown session yesterday, this morning Japanese yen JPY continued to decline to the 3-week low against US dollar as the market continues to expect Bank of Japan (BOJ) will enhance easing monetary policy through the expansion of bond purchase program in the meeting of the agency on 27-28th of July.

Monday, July 11th, Prime Minister Shinzo Abe announced that they will strengthen the economic stimulus measures after the landslide victory of the ruling coalition in Japan's upper house election held on the weekend. The rate increase of the majority coalition in the Japan upper house will allow policy makers to pass bigger fiscal stimulus package in a easier way. Rumors of that the Central Bank of Japan (BOJ) will increase monetary stimulus are strengthened after the yesterday meeting took place between Prime Minister Shinzo Abe and FED former chairman Ben Bernanke, who is known to be author of the giant quantitative easing programs to revive the US economy after the global economic crisis in 2008.

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