Britain's pound flat ahead of key central bank policy meetings

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Britain's pound flat ahead of key central bank policy meetings

The sterling was almost unchanged on Wednesday but was within an almost three week lows against the dollar and the euro ahead of important central bank policy meetings in Britain and the United States.

A surge in inflation will take place longer than expected as policymakers will shift their focus on what to do about the inflation that is longer than expected.

In the week of Thursday, the Bank of England heads into its most unpredictable interest rate decision.

The pound went flat against the dollar at $1.3516 - not far from its low of $3.656 hit on Oct. 13 - and against the euro at 85.07 pence.

The Fed's inflation outlook and a timeline for rate normalisation might cause the BoE to delay hiking, sterling traders are began to understand the inflation outlook.

The ING said that theECB could correct to 0.8500 on its basic scenario of a split BoE vote to increase and some indirect protest about the current market pricing of future interest rates via the comsumer price index CPI forecast.

It's slightly higher - e.g. 0.8540 60 - could be seen on BoE-day tomorrow they added.

The short trade idea targeting 1.3450 would be a shorter than one of the three scenarios, but they said it would generate sterling strength only one of the three scenarios.

The pound would have to move beyond recent highs around 1.3850 until the market expects a more sustainable hiking cycle, which they added, even if the BoE pushed back market expectations.

A calmer tone took hold in a saga over fishing between London and Paris, which has weighed on the pound, as French transport minister Jean-Baptiste Djebbari said Britain had shown a constructive spirit in the talks.