Pound may tumble after rate decision

31 October, 2017

Pound may tumble after rate decision

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  
Gold looks to tax reforms

The gold price is slightly lower in today’s European trading session although it is still hovering around 1 month highs as fears grow that US President...

Gold set to go higher

The gold price has moved significantly higher over the last 4 trading sessions on the back of US president Donald Trump’s trip to Asia as well as political turmoil for the president back home...

Euro set to weaken further

The Euro is under further pressure today against its US counterpart after suffering heavy losses on Friday on the back of strong data from the US...

Gold awaits next Fed chair

The gold price is heading for a 2nd day of gains as the market awaits US president Donald Trump’s choice for the next candidate to run the US Federal...

Further supply cuts key to oil price

Brent oil is now sitting comfortably above the $60, making its highest level in more than 2 years on the back of a deal between...

Will the BOE hike rates?

The British pound is under pressure in today’s trading after some analysts and a Bank of England board member threw into question

Double bottom may save gold

The gold price is under further pressure today as investors continue to pile into the US dollar on the back of proposed tax breaks by US president...

Oil to remain flat

The oil price is set to remain stagnant over the next few years according to some analysts with the outside possibility that the price could tumble if Opec members fail to cooperate...

Mini gold rally won't last

After hitting a low of $1,260 3 days ago, the gold price has rallied nearly $30 to be trading around $1,289 today and some are predicting...