Pre-weekend market-moving influence over GBP/USD will be exerted by today's 12:30GMT advance estimate of US annualized Q3 GDP. A rumour circulated yesterday that it may come in at a sub-forecast 1.8%.
This rumour was seen as a factor in yesterday's cable rise to a one-month high of 1.8925. Demand circa 1.8875 propped sterling through the European morning, following the break below the base of today's 1.8889-1.8921 Asian session range. Stops are tipped below 1.8865.
These could depress the rate towards 1.8850 if tripped. Flagged offers at 1.8950 and 1.9000 are among bull targets north of 1.8925. A 1.8950 option strike rolls off at today's 10am EST NY cut (14:00GMT). There is also speculation that an exotic option barrier might reside at 1.8950.
NIESR says the BoE MPC will have to hike the UK base rate to 5.25% early next year if it is to bring UK CPI down to its 2.0% target level by the end of 2007 (DJ). The MPC is expected to raise the base rate to 5.0% next month. October's final Michigan Sentiment index will be disclosed at 14:00GMT. A slight upward revision to 92.5 is expected.
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