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XTB TRADEBEAT

GBP whipsaws on contrasting BoE signals 

Summary:

  • GBP rises after Haldane strikes hawkish chords
  • Mixed signals from the BoE causing choppy trade
  • GBPUSD remains under pressure, although a close back above 1.2757 would change this outlook

The pound has risen today after the Bank of England Chief Economist, Any Haldane, gave a hawkish speech in Yorkshire. Selected comments are shown below , with the emphasis being ours:

  • Considered a rate hike last week
  • Saw grounds for holding off rate hike till later this year
  • Brexit risk not gone but UK growth solid
  • Downside skew in inflation expectations has dissipated
  • Favours withdrawal of some stimulus before year-end

Yesterday saw BoE Governor Carney deliver a hawkish surprise by stating that the Bank weren’t close to raising rates which came after 3 members dissented from the decision to keep rates on hold at last week’s policy meeting. The dissent caused GBP to spike higher, Carney’s comments sent it lower and now the GBP is rising across the board after Haldane.

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 GBP is rising today following the comments from BoE member Haldane

Overall these mixed messages are making it hard for their to be a clear direction in the Pound and whilst technical levels are being respected to some extent. 1.2757 is an important level to watch for today’s close with a closing level above this forming a bullish engulfing candlestick on D1. On the downside 1.2633 could be key with a close back below this level seeing the bounce form Haldane as short-lived.

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 The GBPUSD has recovered a significant portion of yesterday’s decline. A close back above 1.2757 would change the outlook to a far more positive viewpoint. 

 

 

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