The monthly two-day BoE MPC meeting has begun today. This is expected to result in the UK base rate being raised to 5.0% for the first time since early September 2001. Hawks tip a further 25bp hike in February. Sell interest ahead of 1.9100 kept a lid on cable following its rally from an early Europe intra-day low of 1.9036.
Further sell orders are touted at 1.9125, and pre-1.9150--a level at which an exotic option barrier reportedly resides. "Good names" were touted on the offer in the 1.9120's yesterday. 1.9137 was last Wednesday's 12-week high. 1.9146 was the August 8, 16-month peak. News-wise: control of the US Senate hangs in the balance, with two races still undecided (DJ).
The Democrats have won control of the House of Representatives for the first time since 1994 (BBC website). Jeff Lacker, meanwhile, says the Fed has failed to communicate its determination to bring down inflation in a forceful enough fashion, raising the risk that price increases will become entrenched (FT). Lacker voted for 25bp rate hikes at the last three FOMC meetings.
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