13 Nov 2013
GBP/USD range-bound ahead of BoE report
FXstreet.com (Barcelona) - GBP/USD has been trading in a channel ahead of the Bank of England inflation report, bouncing off resistance between USD1.5890 and USD1.5900.
Sterling came under pressure yesterday after UK inflation numbers came in below expected, towards the BoE’s target rate, easing some of the pressure on the central bank to forward-revise its projections for a rate hike. Annual consumer-price inflation slowed to 2.2 percent in October from 2.7 percent in September, according to the Office for National Statistics. The figure represents the lowest reading since September 2012.
The inflation numbers helped drive sterling to a two-month low at USD1.5864.
UK jobless claims are expected to fall another 30k holding the unemployment rate at 7.7 percent. However, the Bank of England inflation report is likely to have greater market significance. The BoE is unlikely to make any changes to forward guidance. With unemployment falling faster than expected, it may bring its forecasts for the unemployment rate falling below 7 percent forward, to the first quarter 2016, with markets pricing a rate hike early 2015 as a result.
Effects on sterling depend on the emphasis taken by the BoE. Bringing unemployment forecasts forward by a quarter will be sterling positive. However, should it focus on inflation meeting BoE targets, the pound will remain under pressure.
Sterling came under pressure yesterday after UK inflation numbers came in below expected, towards the BoE’s target rate, easing some of the pressure on the central bank to forward-revise its projections for a rate hike. Annual consumer-price inflation slowed to 2.2 percent in October from 2.7 percent in September, according to the Office for National Statistics. The figure represents the lowest reading since September 2012.
The inflation numbers helped drive sterling to a two-month low at USD1.5864.
UK jobless claims are expected to fall another 30k holding the unemployment rate at 7.7 percent. However, the Bank of England inflation report is likely to have greater market significance. The BoE is unlikely to make any changes to forward guidance. With unemployment falling faster than expected, it may bring its forecasts for the unemployment rate falling below 7 percent forward, to the first quarter 2016, with markets pricing a rate hike early 2015 as a result.
Effects on sterling depend on the emphasis taken by the BoE. Bringing unemployment forecasts forward by a quarter will be sterling positive. However, should it focus on inflation meeting BoE targets, the pound will remain under pressure.