This week's key UK event risk is Wednesday's publication of minutes from the January 10/11 BoE MPC meeting, at which the base rate was unexpectedly raised by 25bp to 5.25%. Last November's 25bp increase to 5.0% was delivered by a 7-2 margin, with Rachel Lomax and David Blanchflower dissenting. Blanchflower also voted against last August's 25bp hike to 4.75%. Wednesday will also see the first estimate of UK Q4 GDP.
Forecast: +0.7% q/q, +2.9% y/y. Ernst & Young's Item Club forecasts that the UK economy will grow by 2.9% this year, compared to 2.7% in 2006 (BBC website). The big-picture cable story is gain consolidation to last Thursday's 6-week peak of 1.9780. Helping underpin the pound is the risk that the UK base rate might be raised by another 25bp to 5.5% as early as next month (Feb 8).
The last time the MPC delivered back-to-back rate hikes was in January and February 2000. The latter of those hikes marked the end of a 100bp tightening cycle. 1.9719-1.9758 defines the GBP/USD intra-day range-to-date. 1.9696 (Friday's floor) is a support point south of 1.9719.
No comments:
Post a Comment