Paul Rodriguez from Think Trading states the Bank of England is likely to cut rates tomorrow, but believes it would be symbolic in nature and would lack substance. Rodriguez also presents his view on FX pairs – GBP/EUR, EUR/USD and VIX.
Key quotes
UK stock markets see stress in different areas, anything that sells in dollars is doing well
Very good chance we are going to get a rate cut tomorrow
The best thing would be to get the rate cut out of the way post which FTSE would fall, sterling could rally following a bout of consolidation
VIX is a buy here going into the summer months
GBP/EUR – seen consolidating in the range of 1.155-1.19 followed by a rally. ‘Sterling shall last as a currency, EUR won’t’
EUR/USD – Long period of sideways action, waiting for a breakout, US dollar could go up anyway irrespective of Fed rate hike/cut. Expecting a bearish break in the pair