ECB policy meeting has done last week. Governing Council (GC) of the ECB decided that the interest rate remain unchanged. The GC also announced that the changes in the QE will likely be announced at the October.

Market participants focus on BoE rate statements. We are watching GBPUSD (neutral), GBPNZD (bullish) and EURGBP (mild bearish)

 Data Review:

  • Construction PMI dropped to 51.1 vs 52.1 expected.
  • Services PMI dropped to 53.2 vs. 53.5 Expected.
  • Manufacturing Production 0.5% vs. 0.3% Expected
  • The trade in goods deficit with non-EU countries widened by £2.4 billion
  • Trade in goods deficit with EU countries by £1.3 billion

Upcoming data:

  • Tue, Sep 12 CPI

Consumer price inflation is likely to move higher once again.

Barclays: August CPIH inflation (Tuesday) is likely to remain unchanged at 2.6% y/y (consensus: 2.7% y/y; previous: 2.6% y/y)

ING: We look for a 2.8% headline CPI print (Tue) and higher wage inflation in the jobs report (Wed) to nudge GBP higher.

  • Wed, Sep 13 Jobs report
  • Thu, Sep 14 BoE rate announcement (12.00BST)

Barclays: We expect unemployment to come in unchanged but as recent months have shown, risks are tilted to the downside as companies seem to hire rather than invest.

The MPC’s decisions on interest rates are announced on Thursday (Sep 14) at 12 noon.

Preview: We expect the Bank of England to leave monetary policy unchanged at 0.25%.

At its meeting ending on 2 August 2017, the MPC voted by a majority of 6-2 to maintain Bank Rate at 0.25%. But in June meeting (14 June 2017), the MPC voted by a majority of 5-3 to maintain Bank Rate at 0.25%.

According to Brian Hilliard at Societe Generale, “Market speculation of rate increases has receded. The committee will move back to full strength with the arrival of Sir David Ramsden as the new Deputy Governor, Markets, and Banking. We expect him to vote for unchanged policy, taking the vote to 7-2″.

Barclays: We expect the Bank of England to keep its policy settings unchanged this week (Thursday) while seeking to support the currency with more hawkish rhetoric.

TECHNICAL VIEW

EURGBP off the August high, as we forecast earlier remains in a corrective decline. It has closed far below 20DMA and retraced nearly 23.6% (mid- August low- August high) but the four-month bullish channel remains.

The 23.6% finds reaction finds a t 0.9060, below this 0.9030 its 50DMA exists, coincides with the lower end of the bullish channel. A move below 50DMA/ bullish channel (0.9030/0.9000) needed to retrace further to 0.8950 and 0.8920 it’s 38.2% fib.

Alternatively, resistance seems at 0.9125, 0.9200 and 0.9225. In the near term supply zone, remains between 0.92-0.9225. Selling pressure remains until trades below.

As shown in the below chart, lower low and lower high pattern remain in a descending channel.

The daily RSI and oscillator remains bearish but approaching to oversold levels.

 View: Ahead of UK data and BoE, support zone remains between 0.9060-0.9000. Selling accelerates again only below this.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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