BoE Day, Changes Expected

Cable prints 10 pips or so softer at $1.3955 as we move towards London hours.

• The rate topped out just above the $1.4000 mark on Wednesday, as the DXY registered its trough on the day. The latest round of UK PMI data revealed a marginal slowing in the rate of expansion across the manufacturing & services sectors, with the former topping broader consensus at the margin, while the services reading provided a modest miss.
• There has been a lack of meaningful news flow during Asia-Pac hours, with the uptick in domestic COVID cases garnering most of the coverage on the UK's front pages as we grind towards the next COVID "freedom day," currently scheduled for 19 July.
• Yesterday's high ($1.4002) represents initial technical resistance, followed by the 50-day EMA ($1.4017). A break there would allow bulls to focus on the 16 Jun high ($1.4133). There isn't much in the way of meaningful support until the 21 Jun low/bear trigger ($1.3787).
• The latest BoE monetary policy decision headlines the UK docket on Thursday. No changes are foreseen re: the Bank's broader policy settings. We think it is unlikely, but the most significant event for the market would be if another MPC member joined the outgoing Haldane in voting for a reduction to the QE target. We think that the extra COVID-related uncertainty evident at present will be enough to stop any such move, however. The elephant in the room will be questions surrounding the impact on the labour market when the furlough scheme begins to wind down.