Neil Davies, Head of Trading at PlutusFX, says there’s still life in the upward run
GBP continues to either strengthen or hold firm in its major pairs. GBP/EUR is at 1.266, touching 1.27 this morning, close to a 2 year high and up 11.4% on the bottom that was set a year ago. GBP/USD is at 1.705, down marginally on the near 1.72 reached a week ago, but still well within the tram lines that lead it up from the 1.4815 low seen this time last year. Similarly GBP/JPY is up 13.7% over the last year, and just off its recent highs and GBP/CHF at 1.54 being not a long way off a 3 and a half year high.
No Change to the Bank Rate
The Bank of England minutes released this morning have caused a slight knocking off of the Sterling froth, but it would be a brave man to say the recent trend higher finished for good at 9am. As expected all members of the Monetary Policy Committee voted to keep rates on hold at 0.5% with no indication of when rates are likely to rise, though noted an expectation of an increase in the markets with overnight rates fully pricing in a quarter point rise in Q1 next year, with the expectation of the interest rate being 2.5% in three years’ time.
Clearly the committee are closely monitoring economic data, which though robust, are also noting the downtrend over the last few months in mortgage lending.
It will be interesting to see when the vote is anything other than a 9-0. I wouldn’t be surprised that when the rise does come, it will be a 9-0 vote in favour. Strong leadership from Carney would then be cast in stone.
Neil Davies, Head of Trading, PlutusFX