We are watching GBPUSD (bullish), GBPNZD (bullish) and EURGBP (neutral)
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)
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.
The cable has been moving higher for three straight weeks. From August low’s GBP appreciated more than 3.5%, trading on a verge of a breakout. Earlier we forecast a bullish reaction twice at 1.2800 and again at 1.2980.
It has a parallel resistance seems at 1.3270 above this further head room could expect to 1.3370, 1.3440 and 1.3500. The recent short-term rebound likely to face resistance at the descending trendline as shown in the below chart.
Ahead of the CPI and BoE policy announcement the cable has a potential resistance at 1.35/1.3530 if settles above 1.3350.
Alternatively, fails at 1.3270/1.3370, retracement expected for 1.30 and 1.2950.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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