British Pound Volatility Ahead as Super Thursday Gets Underway
- British Pound volatility ahead as “Super Thursday” gets underway
- US Dollar may shrug off ISM data, Fed-speak to focus on jobs data
- What will drive longer-term G10 FX trends? See our forecasts here
All eyes are on the Bank of England as traders brace for so-called “Super Thursday”. Officials will unveil the latest edition of the quarterly Inflation Report (QIR) – a guide for where policy will steer in the months ahead – as well as a monetary policy announcement and minutes from the MPC meeting that produced it. Governor Mark Carney will also hold a press conference.
Central bank officials find themselves in a difficult position. Hopes for a smooth Brexit process are fading after June’s snap election stripped Prime Minister May of parliamentary majority and economic growth undershot MPC forecasts in the first half of the year. That would argue against tightening if not for soaring inflation and growing stability risks posed by rapid consumer credit growth.
Markets see a rate increase becoming more likely than not in the first quarter of next year. If Carney and company seem worried that recent price gains might be sticky as the labor tightens or turn up the volume on financial stability concerns, a sooner hike might appear more likely. That will probably boost the British Pound. Alternatively, an emphasis on Brexit risks and sluggish growth could hurt the UK unit.
US news-flow comes into the spotlight later in the day, with the service-sector ISM survey as well as factory and durable goods orders statistics due to cross the wires. Comments from St. Louis and Minneapolis Fed branch presidents James Bullard and Neel Kashkari are also on tap. US Dollar follow-through seems unlikely whatever happens however as July’s much-anticipated jobs report looms on Friday.
** All times listed in GMT. See the full DailyFX economic calendar here.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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