After the hawkish Fed, market participants watch closely on the BoE communication. We expect the Bank of England unlikely to deliver such a hawkish tilt and no hike until Fed delivered. Most likely, it will be Q1 or Q2 2023 for the BOE to get the limelight.
Another volatile week ahead with Bank of England to meet on Thursday with no policy changes expected. Before BOE meets, we will see UK PMI on Wednesday. The latest data points suggested that the UK economy up and running hot, and growth side the economy is marching towards the North.
Last week’s ONS report highlighted that the UK labor market strengthens further with claimant count continuing to travel South.
Re rate hike, ING cited,” We’re in the camp looking for a rate hike in 2023″.
Comparing with the ECB, the Bank of England is all positioned in advance. By considering the vaccine rollout program and the growth basis, BOE will be on the tightening camp in advance of EBP. But may not to RBNZ. After last week’s New Zealand GDP figure, the ANZ bank comes up with its first OCR hike in February 2022. In fact, RBNZ is leading Fed for nearly eight months. Hence NZD is the stronger among.
Technically the EURGBP has been capping at 20MA on the weekly chart. For eight weeks, the 20MA capped the price, but 0.8530 stays unplugged. Overall, range trading continues with supports at 0.8530-0.8500 and 0.8400 levels.
Flipside, any decisive breakout above 0.8720 levels may provoke strength towards 0.8860. Hope BOE will guide further action on EURGBP, like how Fed did on G10 currencies last week.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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