Pound may tumble after rate decision

31 October, 2017

The British pound is trading higher again today against its US counterpart, following on from yesterday’s solid performance but some warn the currency may be in danger of a sharp reversal.

The market has now priced in a 90 percent chance that the Bank of England will lift interest rates on Thursday by 25 basis points. If on the outside chance, the BOE leaves rates on hold or delivers a dovish statement after the rate decision the pound is expected to be sold off sharply.

Many believe the rate hike will be a one-time occurrence and will not be enough to support the pound as the year comes to an end.

“The latest GDP report was firmer than expected and reiterated the view that a rate hike will be delivered” says Arindam Sandilya, a strategist at the US-based investment bank JP Morgan

“But still in combination with the overall soft level of growth, uncertainty around the erosion of slack in the economy and no signs of building domestic wage pressures, we expect the BoE to deliver a cautious message alongside the rate hike” he added.

Steven Barrow, head of currency strategy in London at Standard Bank is advising investors to hold short positions in the pound before the rate decision to prepare for the unexpected.

“I’d prefer to go into the meeting” with a short position on sterling. There is a reasonable enough chance they don’t raise rates. We’ll have to see what comes out from the statement the bank puts out.” Mr Barrow said.


Source link  
Aussie dollar up on Chinese data

The Australian dollar remains firmly above the US70c mark in today’s trading session after a strong round of data out of China alleviated...

Pound may hit $1.37 by years end

The British pound is expected to face increased volatility over the coming months as the deadline approaches for the UK to leave the EU at the end...

Has the US dollar peaked?

The US dollar has made significant gains against all the major currencies over the last month as worries over trade tensions between...


Pound may suffer in the long term

The British pound continues to power ahead in today's trading session after yesterday's developments in the British parliament that many see as ending...

Gold needs to remain above $1300

The gold price has staged a substantial rally since last week after the US Federal Reserve latest board meeting where they stated that any move...

Only way for oil is down

The oil price has now broken down through the all important $50 mark, which is a physiological blow to any chance of a rally, and according to...


D-Day for the pound

Traders and Fund managers alike are expected to be glued to their desk on Tuesday evening UK time as the British parliament vote on the Brexit Deal put before them...

Will gold's rally continue?

After spending the majority of November range bound, the gold price has finally broken out to the upside as investors seek out safe havens from the anticipated...

Dollar could weaken for years

The US dollar has been the star performer in the currency markets this year, gaining solidly against all the major currency but some are beginning...

  


Share it on:   or