GBP extends the rally across the board after the CPI data.

  • August CPI Up 0.6% MoM; up 2.9% YoY Versus Up 2.6% YoY in July.
  • August Core CPI Up 0.6% MoM; up 2.7% YoY Versus Up 2.4% Yoy in July

 Upcoming data:

  • Wed, Sep 13 Jobs report

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.

  • Thu, Sep 14 BoE rate announcement (12.00BST)

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.

We repeatedly recommended buying GBPUSD, GBPAUD, and GBPNZD. We believe recent EUR weakness is the GBP strength. The following are the technical overview against USD, JPY, AUD and NZD

GBPUSD:

The higher low pattern continues since four-month, trading above 20MA(month). We repeatedly recommended buying GBPUSD, rebounds more than 4%  from August lows.

Ahead of the BoE Monetary Policy event, GBP risk remains to the upside.

It has potential resistances seems at 1.3350 and 1.3400 its 100MAs (weekly). Clearing the 1.3350 could offer 1.3400, 1.3440 and 1.3500.

Supports moved to 1.3220 and 1.3150. Until remain above 1.3150 buying on a dip favors the trend. Near term USD strength is the risk to this view.

Weekly trading range: 1.3500-1.3150

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

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