What will happen?
Bank of England will make a policy statement on Thursday at 14:00 MT (GMT+3). It’s widely expected that the bank may raise its growth projections and, more importantly, taper its quantitative easing programme, by cutting asset purchases. If it happens, the GBP will get a stimulus to rise.
Indeed, most of the recent economic indicators revealed that the British economy is recovering faster than the BOE forecast in February. Both manufacturing and services industries showed the strongest numbers in seven years in April. Retail sales jumped in March.
Well, but what if no policy tightening? In this case, the GBP is likely to fall.
GBP/USD has been trending up for over a year already. If it manages to break above the chain of recent highs of 1.4000, it will rally up to the high of February 24 at 1.4150. On the flip side, if it breaks below the low of April 30 at 1.3800, it may fall to the lower trend line, which the pair is unlikely to cross on the first try as it has failed to break below this line for over a year.