British Pound Thursday:
From the US to the British Isles, attention shifts across the Atlantic Ocean tonight. Markets will receive an unprecedented data dump from the Bank of England, tonight releasing the quarterly inflation report alongside their monetary policy decision and meeting minutes.
Similar to Tuesday’s RBA decision in Australia, markets aren’t expecting the BoE to front run the Fed and raise rates tonight, but the wording in the statement will be the key. Any forward guidance strongly hinting at the timing of an imminent rate hike from the Bank of England has the potential to send Cable souring. Add inflation data and things could get interesting quickly.
The addition of releasing inflation data today has markets wondering if this could signal a massive shift in guidance. Just check out that block of GBP data in the calendar section below. Boom!
Dollar Dazzles:
Back to the US and although ADP missed overnight, it wasn’t enough to deter dollar bulls thanks to ISM data getting the job done. The USDX hit a fresh 3 month high before pulling back a little in a technical driven move.
Interestingly, Bloomberg has traders nailed on that September is the month the Fed makes its first move.
“The chances of an interest-rate increase next month reached 52 percent Wednesday, up from just 38 percent just two days earlier.”
Just remember that the market knows that liftoff is coming and has priced a lot of it in already. Buy the rumour, sell the news could come into play massively here because it now becomes all about the timing of the second rate hike as this will determine how hard and fast the Fed will continue to hike into 2016.
On the Calendar Thursday:
- AUD Employment Change
- AUD Unemployment Rate
- GBP Manufacturing Production
- GBP BOE Inflation Report
- GBP MPC Official Bank Rate Votes
- GBP Official Bank Rate
- GBP MPC Rate Statement
- GBP BOE Gov Carney Speaks
- USD Unemployment Claims
Chart of the Day:
On British Pound Thursday we can’t not take a look at Cable as our chart of the day!
GBP/USD Daily:
Marked is a GBP/USD scenario if the BoE plays ball with us tonight. Although price is being capped short term in a tight range, the fact it is managing to make higher lows and respecting channel support says that there’s less risk in playing from the long side.
GBP/USD Hourly:
Look to use this most recent kick out of short term support as the level to manage your risk around when playing for a leg higher in the longer term bullish channel.