We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Bullish
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • The USD may rise if the FOMC re-affirms its data-dependent approach and cools 2020 rate cut bets. US retail sales and CPI data may also give the Fed impetus to hold rates. Get your $USD market update from @ZabelinDimitri here: https://t.co/XnDITaDOox https://t.co/A480uVMqF2
  • What tools does the ECB have left to stimulate the Eurozone? Where is the #Euro heading? Find out from Chief Eurozone Economist at Pantheon Macroeconomics Claus Vistesen only on Trading Global Markets Decoded #podcast hosted by @MartinSEssex here:https://t.co/Twr44cZ1GB https://t.co/DXlDH5Cp9e
  • The price of oil extends the advance from the October low as #OPEC and its allies pledge to take additional steps to balance the energy market. Get your crude #oil market update from @DavidJSong here: https://t.co/llGq8yPFH4 #OOTT https://t.co/1OCVOIrK98
  • Gold closed lower after paring early-week gains post-NFP on Friday. But will price finally break support? These are levels that matter on the XAU/USD weekly chart. Get your gold technical analysis from @MBForex here: https://t.co/ovGheRg4MQ https://t.co/ZEQSYktj0w
  • What is your #tradingstyle? Take the quiz and let us know: https://t.co/LPBOcS0Vtd https://t.co/l6FvtcADEH
  • Asia’s vast and growing importance to the world economy is not yet matched by the presence of a currency trading center to rival the established order. Get your update on market drivers in Asia from @DavidCottleFX here: https://t.co/E2hqoRdO7q https://t.co/dnrAMFK4U2
  • Geopolitical developments send #oil prices soaring or falling. Get your market update from @MartinSEssex here:https://t.co/XVXLyG8vjq #OOTT https://t.co/RMk5Eb5fLU
  • Negative yielding government bonds – What are they telling us? Find out from @nickcawley1 here: https://t.co/F6JuhmrvPT https://t.co/KdpSjQSJ8F
  • #Euro area stocks may be preparing to break the four-month uptrend built around hopes for a US-China trade deal and an orderly #Brexit outcome. Get your market update from @IlyaSpivak here: https://t.co/ujlCJiXLvh https://t.co/INdFtsrTTF
  • What is the top market moving theme for the coming week? I disagree with the majority. '$EURUSD, $GBPUSD and $AUDUSD Top Volatility Candidates With #Fed, #Election, #TradeWar' https://www.dailyfx.com/forex/video/daily_news_report/2019/12/07/EURUSD-GBPUSD-and-AUDUSD-Top-Volatility-Candidates-On-Fed-Election-Trade-War.html?CHID=9&QPID=917719 https://t.co/Q1dbZVN5Us
British Pound May Fall as Soft Inflation Data Undermines BOE Bets

British Pound May Fall as Soft Inflation Data Undermines BOE Bets

2014-07-12 02:54:00
Ilya Spivak, Sr. Currency Strategist
Share:
British Pound May Fall as Soft Inflation Data Undermines BOE Bets

Fundamental Forecast for British Pound: Neutral

  • British Pound Rudderless After Non-Event BOE Policy Announcement
  • June CPI May Disappoint, Trimming Rate Hike Bets and Sinking GBP
  • Help Identify Critical Turning Points for GBP/USD with DailyFX SSI

Monetary policy expectations remain firmly in the driver’s seat for the British Pound. Indeed, the correlation between GBPUSD and the UK 2-year Gilt yield – a reflection of investors’ near- to medium-term interest rate outlook – is now at a one-month high (0.42 on 20-day percent change studies). Last week’s BOE announcement proved to be a non-event, with Mark Carney and company leaving the setting of monetary policy unchanged and publishing no explanatory statement to lay out their reasoning going forward. That has left Sterling adrift, with key crosses EURUSD and EURGBP crosses left mired in narrow ranges.

The week ahead may mark a breaking point in the standstill as policy-shaping news flow returns. The spotlight will be on June’s CPI figures. The headline year-on-year inflation rate is expected to edge higher to 1.6 percent having slumped to a five-year low of 1.5 percent in the prior month. UK price-growth readings have proven increasingly disappointing over recent months. Indeed, a Citigroup gauge measuring realized inflation data outcomes relative to consensus forecasts dropped to the lowest level in nearly two decades last month. That suggests analysts are underestimating the degree of deterioration in pricing trends and opening the door for a downside surprise.

A lower-than-expected CPI print is likely to plant seeds of doubt in investors’ effervescent BOE interest rate hike expectations. A distinctively hawkish shift in Governor Carney’s rhetoric in recent weeks has been taken at face value, pushing yields and the UK unit upward. Such complacency seems misplaced. The BOE’s policy-setting mechanism works on a “one man, one vote” basis: in order to raise rates, Mr. Carney would need to convince 4 more members of the 9-person MPC committee to vote with him to do so. UK economic data has increasingly fallen short of expectations since February, meaning gathering such a majority could prove difficult. An eye-catching miss on the benchmark inflation gauge threatens to put such concerns in such relief, forcing investors to pare back runaway tightening bets and sending Sterling broadly lower.

Elsewhere on the docket, Mr. Carney and Deputy Governor Andrew Bailey along with Donald Kohn and Martin Taylor of the FPC are set to testify before a Parliamentary committee on the latest Financial Stability Report. The key take-away from that document was that officials preferred macro-prudential tools rather than monetary policy as the vehicle to rein in the worryingly exuberant UK property market. That means the report’s contents offered little to help illuminate the near-term trajectory of interest rates, limiting its own impact and that of testimony on its findings on the British Pound.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.