GBP Nudges Higher as BOE Policy MakersTestify
GBP Moving Higher From Depressed Levels
Four senior members of the Bank of England’s monetary policy committee are discussing the last UK Inflation Report in Parliament and GBP has picked up a touch on early commentary. Early talk from Gertjan Vlieghe pushed GBP when the economist said that UK interest rates are likely to rise by between 0.25% and 0.50% per year over the forecast (3-year) period. He also added that there is only a ‘small amount’ of slack left in the UK economy, between 0% and 0.50%.
In addition, the latest release of UK public finance data show public sector net borrowing falling with the UK borrowing GBP18 billion less in 2017/18 than the Office for Budget Responsibility estimated one year ago. Public sector net borrowing (excluding public sector banks) decreased by GBP1.6 billion to GBP7.8 billion in April 2018, compared with April 2017, the lowest April net borrowing since 2008.
Sterling started to move higher post comments and data with GBPUSD rising to 1.34900, one cent higher than Monday’s low of 1.33900. GBPUSD has also been aided by a slightly weaker USD with the Dollar Basket currently trading at 92.95, off Monday’s peak of 93.66. The GBPUSD daily chart also highlights that Sterling is currently oversold against the greenback – RSI at 30.9 – while if the pair can consolidate above the January 11 swing low at 1.34581, further short-term gains are possible.
The latest IG Client Sentiment Report shows that while retail remain long of GBPUSD – a bearish contrarian signal – recent changes in sentiment warn that GBPUSD may soon reverse higher.
GBPUSD Daily Price Chart (August 2017 – May 22, 2018)
Sterling traders should be aware that closely watched UK inflation data (April) is released on Wednesday – see the DailyFX Calendar here – and will shape GBP trading in the short-term.
DailyFX analyst Justin McQueen will be covering the UK Inflation Release live from 08:15 GMT
DailyFX has a vast amount of updated resources to help traders make more informed decisions. These include a fully updated Economic Calendar, Educational and Trading Guides and the constantly updated IG Client Sentiment Indicator.
--- Written by Nick Cawley, Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.