HSBC: Here is why risk-reward around this week's BOE may not be encouraging for GBP bulls

<p>HSBC lays out its perspective on the potential
movements of the GBP in relation to the Bank of England's (BoE) upcoming
decisions:</p><p>Key Takeaways:</p><ol><li><p>Expected Rate Hike: HSBC's primary assumption is
that the BoE will increase the policy rate by 50 basis points on 3
August. The market's current expectation is a 37 basis point increase.</p></li><li><p>Transient GBP Upsurge: If HSBC's 50 basis point
forecast holds true, they anticipate a quick, reactive GBP purchase
surge. However, they emphasize that any such GBP increase would be
temporary.</p></li><li><p>Alternate Rate Hike Scenario: There is a substantial
likelihood, according to HSBC, that the BoE will opt for a smaller rate
hike of 25 basis points. In this scenario, the GBP would likely
experience an immediate decline.</p></li><li><p>Unfavorable Risk-Reward: Given the scenarios and
their associated potential outcomes, HSBC believes the risk-reward ratio
surrounding the BoE meeting does not offer much incentive for those
bullish on GBP.</p></li></ol><p>Summary:</p><p>HSBC sees a challenging environment for GBP enthusiasts ahead of the
BoE meeting. While there's potential for short-term gains if the BoE
implements a 50bp rate hike, the benefits are expected to be fleeting.
Moreover, the possibility of a smaller rate hike of 25bp would </p><p>probably
lead to an immediate GBP drop, further complicating the risk-reward
landscape for GBP bulls. GBP/USD was last at 1.2837.</p><p>For bank trade ideas, <a href="https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD" rel="nofollow" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&amp;source=gmail&amp;ust=1690916459231000&amp;usg=AOvVaw2g2kdOCFd4uhGLdDGWcg7I">check out eFX Plus</a>. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. <a href="https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD" rel="nofollow" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&amp;source=gmail&amp;ust=1690916459231000&amp;usg=AOvVaw2g2kdOCFd4uhGLdDGWcg7I">Get it here</a>.

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This article was written by Adam Button at www.forexlive.com.