Sterling lower on King comments/minutes
The Pound fell back from its 14 year highs yesterday after the Bank of England Minutes and comments from Bank of England Governor Mervyn King. Much of the sell off was triggered by King’s comments on Tuesday night and leading into the minutes the GBP/USD had fallen from 1.9900 to 1.9740. King suggested that earlier action by the Bank of England to counter inflation may avoid the need for larger rises in the future.
The market was looking for a 7-2 or 6-3 result from the minutes however the result was a close 5-4. GBP/USD initially fell on the release but a look at the minutes revealed that other members were not against the need to increase rates but preferred a February hike to January.
In addition the GDP data released at the same time was stronger than expected at 0.8% qoq / 3.00% yoy – the strongest growth in 2 ½ years.
The GBP/USD fell to 1.9700 but bounced back to 1.9760 on the GDP data and further analysis of the minutes. Later in the day however the GBP lost momentum and fell below 1.9700.
The market is now pricing in a further 25bp increase this quarter but nothing further. A poll of economists on Reuters showed 59% view no further rises this quarter with the remaining 41% expecting, like the market, another 25bp increase this quarter.
The major move overnight and this morning has been in the JPY. The JPY has strengthened across the board on news European Finance ministers will push for a stronger JPY at next month’s G7 meeting. The move in the JPY had begun earlier following benign inflation in Australia led to traders moving out of AUD and into JPY as proxy for the Asian economy.
Today sees the release of German Ifo data, US jobless claims and US Existing home sales.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
The market was looking for a 7-2 or 6-3 result from the minutes however the result was a close 5-4. GBP/USD initially fell on the release but a look at the minutes revealed that other members were not against the need to increase rates but preferred a February hike to January.
In addition the GDP data released at the same time was stronger than expected at 0.8% qoq / 3.00% yoy – the strongest growth in 2 ½ years.
The GBP/USD fell to 1.9700 but bounced back to 1.9760 on the GDP data and further analysis of the minutes. Later in the day however the GBP lost momentum and fell below 1.9700.
The market is now pricing in a further 25bp increase this quarter but nothing further. A poll of economists on Reuters showed 59% view no further rises this quarter with the remaining 41% expecting, like the market, another 25bp increase this quarter.
The major move overnight and this morning has been in the JPY. The JPY has strengthened across the board on news European Finance ministers will push for a stronger JPY at next month’s G7 meeting. The move in the JPY had begun earlier following benign inflation in Australia led to traders moving out of AUD and into JPY as proxy for the Asian economy.
Today sees the release of German Ifo data, US jobless claims and US Existing home sales.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
posted by Wise Money @ 11:30 AM
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