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Why BoE Didn't Cut

June 20, 2024
Frank Cabibi

Today, the Bank of England announced the bank rate decision and kept interest rates where they are. This caused some confusion among investors as the UK's inflation rate is now back to 2%. And it also raises the question as to why the Fed forecasts one rate cut this year with over 3% inflation.

Swiss Cuts, UK Sticks

The pound is extremely week against the Franc. GBPCHF is at a -10. CHF saw a rate cut this week which may suggest weakness in the currency. Meanwhile, Governor Bailey from BoE said that waiting to cut is the right move to make sure inflation stays where it is at.

Gold Runs Hotter

Gold finally breaks up to the rising trend line on the 1D timeframe. The metal might have found strength from today's unemployment claims which came in a little higher than expected. Either way, gold will need to close above this level of resistance to retest the $2,387 level.

Who is Stronger?

The decision to keep UK rates where they are could make the September cut in the US less official. This also suggests that the BoE is playing it safe while the Fed could be taking a huge risk of cutting in the fall. Now the pair is mixed and fraught with uncertainty.

Retail Spotlight

Most indices are shorted by retail. Gold remains mixed along with EURUSD and GBPUSD. Metals are still the top bought asset on the list.

Smart Money Spotlight

GBPUSD is now leaning bullish on COT sentiment and bearish on retail sentiment. Keeping rates the same now puts pressure on the Fed. The Fed may now consider keeping interest high until CPI does move where they want.

Fundamental Spotlight

The inflationary trend in the UK shows us much more promise than in the US, where there is no real trend at all. CPI in the US is in the same spot it was one year ago suggesting no progression at all.

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