Another round of commentary from the BoE over the weekend with Governor Bailey signalling yet again that the BoE will have to act in order to curb down inflation. The Governor noted that while monetary policy cannot solve supply-side problems, which the UK economy is currently facing, the Bank will have to act and must do so if there is a risk to medium-term inflation and inflation expectations. Despite all this, Bailey reiterated that he believes higher inflation will be temporary. On the labour market front, the Governor said that labour market demand continues to be stronger than expected, although concerns about labour supply and growth remain.
Admittedly, with these latest comments prompting money markets to increase BoE tightening bets further with the November meeting now seen as a 60/40 call, my recent GBP piece does not look to have aged all too well. That being said, not every member on the committee is on board with raising interest rates so soon with the more dovish Tenreyro sticking with her cautious tone.
A break of strong support at 0.8470 confirms downtrend continuation bias. Selling pull backs into this level, which should act as resistance is the preferred approach.
The Euro is battling against a strong USD whilst the GBP is being supported by the Bank of England’s rhetoric on interest rate hikes.
A longer term target could test the 0.8350 area.
Admittedly, with these latest comments prompting money markets to increase BoE tightening bets further with the November meeting now seen as a 60/40 call, my recent GBP piece does not look to have aged all too well. That being said, not every member on the committee is on board with raising interest rates so soon with the more dovish Tenreyro sticking with her cautious tone.
A break of strong support at 0.8470 confirms downtrend continuation bias. Selling pull backs into this level, which should act as resistance is the preferred approach.
The Euro is battling against a strong USD whilst the GBP is being supported by the Bank of England’s rhetoric on interest rate hikes.
A longer term target could test the 0.8350 area.