The USD has taken on a soft tone across the board this morning but the pound is lagging the pace. Word of a fresh $4.1 bln US-bound M&A deal may be helping keep a lid on Sterling. Dealers also noted talk of Asian and Middle Eastern selling interest into strength this morning helping put a near-term top in place before the US open.
A quarter-point BOE hike is baked in the cake for Thursday though there is some hope from GBP bulls that a 50 bp hike may be in the works. Given the BOE's repeated forecasts for a sharp fall in inflation later this year, a 50 bp hike seems a bit aggressive to us. Small bids are at 1.9950 but trailing stops are eyed around 1.9945. Given thin Bank Holiday conditions, they look a bit vulnerable.
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