The British pound trades mixed to slightly lower on the market ahead of the Bank of England meeting later today.
With Brexit concerns still weighing on the economy, markets expect that the bank’s nine-member Monetary Policy Committee will keep interest rates steady at the current 0.75%.
Although the Bank of England will probably keep policy on hold ahead of the December general election that could change Brexit’s course completely, not everyone is convinced. One of the nine MPC members, Michael Saunders, said earlier that “persistently high uncertainty” around Brexit could lead to a rate cut by the bank.
In fact, the Bank of England is widely expected to lower economic growth forecasts for 2020 as a result of ongoing economic uncertainty that keeps a lid on investments. The previous growth estimate set by the bank was 1.3%.
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From Norway, we’ll get the change in monthly manufacturing output that is expected to rise by 0.4% compared to the previous month’s fall of -1.1%. However, possible headwinds for the krone could be lower energy prices, with Brent crude set for a fall for the second straight day.
The British pound vs Norwegian krone pair was quite calm during the Asian session, trading in a narrow range between 11.78 and 11.80. Still, the pound managed to recover some ground as the pair reached the lower triangle line, which could provide further support for sterling from a technical perspective.
The RSI is still printing a heavy bearish divergence, suggesting that buyers could have a hard time trying to break above the November high of 11.91. That level also acts as the upper triangle resistance.
To the downside, we see the recent November lows of 11.72 as important support levels that — if reached — could increase buying pressure in the pair.
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