Better than expected UK Q3 GDP has raised the chances of a hike next weekI’m reading lots of reports on various media and comments here saying that the better qq GDP headline and production data makes a BOE rate hike a certainty for next Thursday.
I’m ready to concede that, if only for a bit of wiggle room to lower again as I have long highlighted, Carney & Co may now have the face-saving ammo/excuse they need to raise by 0.25% although I still wouldn’t be surprised to see them hold again.
If they do hike in Nov or Dec that will correct the post-Brexit knee-jerk cut and it’s a view of some that it will have no impact but I still beg to differ.Rising household debt must remain a concern and unscrupulous lenders ( we have plenty of those here in the UK still ) will seize on the excuse to jack up rates/charges thus adding to consumer woes.
So with that in mind I’m sitting on my hands atm, quite apart from having my work cut out here at FXL typing for two. I may be interested for a short term jobbing opportunity to sell around 1.3220-30 and/or 1.3250 depending on p/a but I’m in no rush. What we need to ascertain now (and maybe not able to glean until post-BOE decision) is how much a hike is factored in.
We saw GBPUSD rally strongly from 1.30 to 1.3650 on the initial wave of BOE rhetoric-led euphoria and just as quickly retreated back. Consensus seemed to think that a hike was 80% bolted on prior to today’s data and that will only have increased today. So we need to see how far this current rally extends to get a better picture of market appetite to be long.
Either way I still expect it to be a buy-rumour/sell-fact scenario and decent two-way business still in the meantime. What we can’t know at this stage is the starting point at 11.00 GMT next Thursday. Conjecture on that is pointless at this time.
GBPUSD currently 1.3208 just off session highs, EURGBP 0.8907 on session lows with decent support between 0.8895-00 the next target again. GBPJPY continues its march higher at 150.85 and remains a key driver.