The BoE MPC is expected to raise the UK base rate by 25bp to 5.5% at midday BST tomorrow (Thursday). There is more risk of a 50bp hike as advocated by four "Shadow" MPC members, than no change.
GBP/USD rallied to an intra-day peak of 1.9935, with EUR/GBP revisiting yesterday's 0.6792 two-week low, after the BRC disclosed that annualized UK shop price inflation rose to 0.8% in April from an upwardly revised 0.7% in March.
1.9910 (today's Asian session top) is now a sterling support point. Lower props include 1.9880 (yesterday's low), 1.9870, 1.9840/50 and 1.9825. Resistance levels north of 1.9935/40 are located at 1.9970/80 and 2.0000.
Following yesterday's ceremony at Stormont to mark the return of power-sharing to Northern Ireland, Tony Blair is expected to announce today or tomorrow that he is standing down as Labour leader and PM. Chancellor Gordon Brown is expected to succeed Blair as PM in late June/early July.
Today's key event risk is the 18:15GMT FOMC statement to accompany an (expected) unchanged Fed funds rate verdict.
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