Talking Points:

  • British Pound may rise as UK CPI data boosts BOE rate hike speculation
  • Comments from Governor Carney, new MPC voters may boost GBP gains
  • US Dollar returns to the offensive as Fed tightening narrative reemerges

September’s UK CPI statistics headline the European economic data docket. The headline year-on-year inflation rate is expected to rise to 3 percent, the highest since April 2012. PMI survey data reinforces the case for a pickup in price growth. A firm print may help bring the prospect of a near-term BOE interest rate hike back into focus for FX markets, boosting the British Pound.

Comments from BOE officials help Sterling’s cause. Governor Mark Carney is due to testify before Parliament’s Treasury Select Committee alongside new MPC members David Ramsden and Silvana Tenreyro. If the incoming voters seem keen to push back against the recent inflation run-up and the previously dovish Mr Carney signals that he too is on board, the UK unit’s gains may be significant.

The US Dollar outperformed in Asia Pacific trade, extending a rebound started at the beginning of the week. The greenback rose alongside front-end Treasury bond yields, hinting that the build in Fed interest rate hike speculation underpinning the greenback’s rise from late-September lows is back at the forefront following a pause last week.

Where are the major currencies heading in the next 3 months? See our Q4 forecasts here!

Asia Session

British Pound May Rise on UK CPI, Carney Commentary

European Session

British Pound May Rise on UK CPI, Carney Commentary

** 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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