from Caxton Daily Market View
GBP- High UK CPI Data Causes GBP Rally
Figures for UK YoY CPI released early this morning showed inflation increasing at a higher rate than the 10.7% markets had expected. In the aftermath of the news GBP snapped a four day rally against USD, likely as the market begins to cool after last weeks extended bull run. The figures put BoE Governor Bailey under heavy pressure to hike the rate by another 75bps in December. However, Bailey has recently voiced his concerns about the decline in the UK housing market and weak GDP growth. His speech at 13:30 today will hopefully clarify what the BoE plans to do in response to the figures.
from ING
GBP: BoE speakers in focus
Bank of England speakers will be in focus today after the release of the October CPI
data. This is expected to be peaking around the 11%year-on-year level around
now. BoE Governor Andrew Bailey and colleagues testify to the Treasury Select
Committee at 1515CET today. We suspect the message will be very much the same
as that given at the policy meeting earlier this month - i.e. do not expect 75bp hikes
to become common and that the market pricing of the tightening cycle is too
aggressive.
GBP/USD briefly peaked over 1.20 yesterday. We think 1.20 is a good level to hedge
GBP receivables. Equally, we have a slight preference for EUR/GBP staying over
0.8700. Tomorrow is the big event risk of the autumn budget - which on paper
should be sterling negative.
So all eyes are on the UK and GBP when the Bank of England governor speaks from now on. As if they weren't already. The GBP has declined every time the BoE has raised rates.
CPI y/y came in above expectations at 11.1% v's 10.7%
Core CPI y/y stays at 6.5%
PPI Input m/m is down to 0.6% from 0.9%
Double-digit inflation will not make the BoE MPC pivot from their current monetary policy
GBP- High UK CPI Data Causes GBP Rally
Figures for UK YoY CPI released early this morning showed inflation increasing at a higher rate than the 10.7% markets had expected. In the aftermath of the news GBP snapped a four day rally against USD, likely as the market begins to cool after last weeks extended bull run. The figures put BoE Governor Bailey under heavy pressure to hike the rate by another 75bps in December. However, Bailey has recently voiced his concerns about the decline in the UK housing market and weak GDP growth. His speech at 13:30 today will hopefully clarify what the BoE plans to do in response to the figures.
from ING
GBP: BoE speakers in focus
Bank of England speakers will be in focus today after the release of the October CPI
data. This is expected to be peaking around the 11%year-on-year level around
now. BoE Governor Andrew Bailey and colleagues testify to the Treasury Select
Committee at 1515CET today. We suspect the message will be very much the same
as that given at the policy meeting earlier this month - i.e. do not expect 75bp hikes
to become common and that the market pricing of the tightening cycle is too
aggressive.
GBP/USD briefly peaked over 1.20 yesterday. We think 1.20 is a good level to hedge
GBP receivables. Equally, we have a slight preference for EUR/GBP staying over
0.8700. Tomorrow is the big event risk of the autumn budget - which on paper
should be sterling negative.
So all eyes are on the UK and GBP when the Bank of England governor speaks from now on. As if they weren't already. The GBP has declined every time the BoE has raised rates.
CPI y/y came in above expectations at 11.1% v's 10.7%
Core CPI y/y stays at 6.5%
PPI Input m/m is down to 0.6% from 0.9%
Double-digit inflation will not make the BoE MPC pivot from their current monetary policy
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