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11 Sep 2013
Flash: GBP/USD eyes 1.6000 but cautious prevails ahead of FOMC - BBH
FXstreet.com (Córdoba) - The Sterling is among the best performers Wednesday, having reached new 7-month highs against the dollar and 8-month highs against the euro in response to better than expected jobs data. The BBH analyst team commented on data implications on BoE policy and the GBP.
Key Quotes
“The data further undermines the credibility of the BOE's forward guidance and reinforces speculation that it may raise rates by the end of next year”.
“On one hand, the weak earnings growth may be seen from some at the BOE as an indication that price pressures may ease, which it should find as comforting”.
“On the other hand, the recent strength of sterling and the backing up of money market rates shows a market pricing in tightening well before Carney's forward guidance suggests. Indeed, while the speculation that the Fed may slow its monetary stimulus, the price action suggests the market is expecting the BOE to actually hike rates before the US (and of course, well before the ECB)”.
“Initial support for sterling is now seen in the $1.5730-50 band. While the $1.60 area may beckon from a technical perspective, many may turn cautious later in the week and into early next week as the FOMC outcome is awaited”.
“For its part the euro was sold just below GBP0.8385, but quickly bounced back above GBP0.8400. A move back toward GBP0.8430-50 may provide a better selling opportunity”.
Key Quotes
“The data further undermines the credibility of the BOE's forward guidance and reinforces speculation that it may raise rates by the end of next year”.
“On one hand, the weak earnings growth may be seen from some at the BOE as an indication that price pressures may ease, which it should find as comforting”.
“On the other hand, the recent strength of sterling and the backing up of money market rates shows a market pricing in tightening well before Carney's forward guidance suggests. Indeed, while the speculation that the Fed may slow its monetary stimulus, the price action suggests the market is expecting the BOE to actually hike rates before the US (and of course, well before the ECB)”.
“Initial support for sterling is now seen in the $1.5730-50 band. While the $1.60 area may beckon from a technical perspective, many may turn cautious later in the week and into early next week as the FOMC outcome is awaited”.
“For its part the euro was sold just below GBP0.8385, but quickly bounced back above GBP0.8400. A move back toward GBP0.8430-50 may provide a better selling opportunity”.