COVID-19 cases rise
Last week the BoE revealed negative rates are now under consideration which opened up immediate GBP selling. See here. Although the interest rates were kept unchanged at 0.10% it was the headline that the Bank of England said the MPC had been briefed on the BoE's plans to explore how a negative bank rate could be implemented effectively that brought about GBP selling.
The net result of the latest BoE decision was that money markets brought forward expectations on UK interest rates turning negative. Negative rates were seen in Feb 2012 after the meeting vs March 2021 prior to the meeting.
The UK is now facing a rise in COVID-19 cases. News flow over the weekend showed a steady worsening of the outbreak and The Chief Medical Officer has told PM Johnson that Britain is at a 'critical point' with case numbers heading in the wrong direction> Ministers are also considering a two week national lockdown around October half term in the UK.
The risks are now mounting for the UK with Brexit negotiations on a knife edge, job losses anticipated for the end of the UK furlough scheme and rising COVID cases to increase the chances of a natural lockdown. As a result expect sellers on the GBPJPY pair in the coming days as long as this situation remains the base case.
Gold long update
Here is an update on my gold longs from last week -
https://www.forexlive.com/news/!/gold-post-fomc-20200917
I am now out of my gold long positions on the very negative risk sentiment that came into the market yesterday. The USD was supported and that dragged XAUUSD lower through $1900. That was my 'I'm out of here' price. So, that's all folks.
