Cable (GBP/USD) popped higher after BoE denied speculation of an emergency rate cut. Cable is trading back in to 1.820 after it recorded 1.8092 lows on a CNBC report of a potential rate cut after today's U.K. retail sales release.
Earlier News:
Rumors that the BoE is to cut the repo rate in an emergency announcement today, after ONS data releases at 8.30GMT. The only other emergency rate cut previously carried out by the independent central bank was after 9-11 and would take markets by some surprise, as the BoE prides itself on its predictability. It would certainly be an extraordinary measure, as the BoE has just announced large liquidity injections through the coordinated central banks measure, aimed at boosting market confidence and easing money market tension. Question is if an emergency rate cut now would calm markets, or be seen as a panic move, installing further fear.
GBP weighed on amid BoE rate cut speculation, with Cable extending its correction from overnight highs of 1.8263 to trade back in to 1.8100, while EUR/GBP popped higher to trade up to 0.7918 highs versus a European low of 0.7860. Cable is likely to regain its firmer tone if rumors are unfounded, with the JPY crosses are also expected to drag GBP-JPY higher, while a softer dollar tone should put a floor underneath Cable.