EUR - British Interest Rates Due Up

Traders are anticipating today's Official Bank Rate announcement from the Bank of England which should be the highlight of the trading day. Expectations are for the BOE to hold interest rates steady at the current level of 0.50% with no adjustment to the 200B Asset Purchase Facility.

Inflation continues to rise above forecasted levels of the BOE as the central bank attempts to balance the inflationary risks versus a rising interest rate environment that could hurt British economic growth rates. GDP rates are expected to be on the light side, especially with a round of belt tightening to come as the British government attempts to reign in government spending and rising deficits.

As such, economists are forecasting rising British interest rates with expectations of a 1 in 5 chance of the BOE surprising the market today with an interest rate hike.

Currently the GBP/USD is trading near the 1.6200 level. Resistance is located at last week's high of 1.6340. Support for the pair is found at the rising trend line off of the mid-February low which comes in today at 1.6090. A breach of this level could spur further losses to the 1.5960 support.