Day of BoE hike marks day for pound to struggle

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August seasonality bearish for GBP/USD, bullish for EUR/GBP

The suspense of the Bank of England’s interest rate decision on Thursday will make the pound trade cautious, and the price trend before the decision may depend on today’s US ISM manufacturing data and Wednesday’s ADP employment data.

Sterling has generally reacted poorly to rate hike decisions prior to this year. Three of the four rate hikes this year sent GBP/USD lower on the day. EUR/GBP rallies four times.

Sterling has a markedly bearish seasonality in August, with GBP/USD falling eight times and EUR/GBP rising seven times over the past decade.