Sterling’s post-Broadbent rally faded pretty quickly after markets realized that he didn’t cover any new ground from what we learnt from yesterday’s comprehensive guidance following the August BoE MPC meeting. Cable is presently settled near 1.3145 after capping out a 30-pip-odd rally at 1.3164. The pound is nearly 1% down on the high it saw yesterday ahead of the BoE announcement. The pound also remains heavy versus the euro, near 10-month lows, and we advise a bullish trend following strategy in EUR-GBP. During a BBC radio interview Broadbent said that there would “probably” be a “need to be rate rises, and indeed more rate rises than those priced into to the interest rate curve in future than the financial markets expect,” though balanced this by saying that uncertainties about Brexit appear to be putting companies off new investment while acknowledging the squeeze on UK inflation-adjusted incomes.
GBPUSD, H1 has support at the 200 period moving average around 1.3130 and resistance at that spike from earlier at 1.3164. Sideways into the 12:30 NFP announcement is likely.
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Senior Market Analyst
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