OFX: GBP rallies after MPC member votes for rate hike at last BoE meeting

Posted: 17 March 2017 | Alex Edwards, OFX | No comments yet

Sterling surged higher yesterday after it was revealed that one member of the MPC, Kristin Forbes, voted for a rate hike at the last Bank of England monetary policy meeting.

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The language of the most recent statement also appeared more hawkish, suggesting that other members could be swayed should there be only slight upside news on the prospects for activity or inflation. It came as quite a surprise and a positive for GBP, and it’s continuing to support bids in GBP/USD this morning. The pair opens at 1.2385, looking like it could well make a break of 1.24 at some point soon.

Focus today will turn to the Bank of England Quarterly Bulletin and a plethora of U.S. economic data. UK PM Theresa May is also due to speak at the Conservative Party’s Spring conference, so this might have an impact too.

EUR/USD has remained well bid in the wake of the Dutch election result. It’s flirted with a break of the 1.0800 level over the last 24 hours after also getting a boost from comments by the governor of the Austrian National Bank, who said in an interview that “the ECB could also raise the deposit rate earlier than the prime rate”. With both currencies rising relative to the dollar, EUR/GBP hasn’t done an awful lot; the pair fell from .8755 to .8670 immediately following the Bank of England announcement yesterday but has recovered since to open this morning at .8700.

AUD/USD hasn’t done a lot over the last few trading sessions and trades at .7680 currently, this after starting the day much closer to the .77 figure yesterday.  US data could see this change later today but the pair is more than likely to meander in to the end of the week. GBP/AUD is up on the last 24 hours, mostly a result of the BoE announcement – it’s back up above 1.6000 and trades at 1.6125.

NZD/USD soon gave up its post FOMC gains and fell from .7010 to a low of .6950 yesterday. The positive correlation with equity markets seems to have been broken too and the decline came despite the Dutch election inspired risk rally we saw yesterday. GBP/NZD is a touch higher as a result and opens in London at 1.7710. 

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