Slim chance of a hawkish surprise
In my opinion, the Bank of England (BOE) minutes could throw a hawkish surprise today – a vote in favour of a rate hike. I believe the BOE may have begun telegraphing a rate hike little more aggressively. This is evident from Carney’s comments last week that rates could rise at the turn of this year. So a hawkish surprise may come through the BOE minutes today.
In such a case, the GBP stands to gain across the board, especially against the low yielding European currencies and commodity currencies- AUD and NZD.
On the charts…
The post has witnessed an upside breakout from the sideways channel on the hourly. The hourly candle also closed above 1.5607 (23.6% Fib of Apr-June rally). So the gains are likely to be extended to 1.5638 (38.2% Fib of June rally). The gains could be extended even further to 1.5680-1.5690 (rising extended) if the minutes provide a hawkish surprise or refrain from making comments on the strengthening GBP. On the downside, a break below 1.56 (channel support), could push the cable lower to 1.5571 (hourly 200-MA).