Cable is currently trading half-a-cent below its European morning six-week peak circa 1.9725, against a big-picture backdrop of gain consolidation from 1.9218 (March 14 low). The risk of Q2 UK and US interest rate divergence is helping underpin the pair.
The probability of another 25bp UK rate hike to 5.5% next quarter perhaps as early as next month (Apr 5), has risen on the back of today's very strong February UK retail sales data and an unexpected rise in March's CBI manufacturing orders balance. These GBP-positive figures follow Tuesday's UK CPI upside surprise although MPC member Barker says the committee does not want to "overreact" to that inflation shock (Northern Echo website).
By contrast, the risk of a 25bp Fed funds rate cut to 5.0% in June has increased following yesterday's more dovish than expected FOMC statement. Sterling support points include 1.9665 (today's Asian session base), 1.9650, 1.9620, and 1.9600.
No comments:
Post a Comment