Cable is consolidating gains to a 15-year peak of 1.9915, with the risk that the UK base rate might be raised by another 25bp to 5.5% as early as next month (Feb 8) helping underpin. The last time the BoE delivered back-to-back UK rate hikes was in January and February 2000.
Fresh guidance as to the probability of a February 8th UK rate increase will be supplied by a 19:00GMT speech from BoE Governor Mervyn King at the Birmingham Chamber of Commerce annual banquet. Expect some profit-taking on long GBP positions if King is less hawkish-than-expected.
GBP/USD support points include 1.9883 (earlier stall point), 1.9849 (Dec 1 high), and 1.9800. Stops above 1.9800 were tripped in early European trade. December's US leading indicator will be revealed at 15:00GMT.
Forecast: +0.2% m/m. Minutes from the January 10/11 MPC meeting, and the first estimate of UK Q4 GDP, will be disclosed at 09:30GMT tomorrow.
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