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Mar 15 - 07:55 AM

GBP/USD - COMMENT-GBP/USD To Be Roiled If Fed, BoE Go Against Grain

By Rob Howard  —  Mar 15 - 06:10 AM

Cable could rise or fall steeply if either the Federal Reserve or Bank of England opts not to increase interest rates next week while the other one hikes -- with scope for volatility if both decide against a hike.

Money markets currently suggest there is a 65% chance of the Fed raising rates by 25 basis points to 4.75-5.00% on March 22 and a 52% chance of the BoE raising rates by 25 bps to 4.25% on March 23. FEDWATCH, 0#BOEWATCH

GBP/USD might revisit January's 1.2447 seven-month high if the Fed does not hike next week and the BoE does, or revisit last week's 1.1805 15-week low if the Fed hikes and the BoE doesn't.

In the event that neither central bank raises rates, cable might follow any initial gains towards 1.24 with subsequent losses towards 1.19.

The Fed rate decision is at 1800 GMT on March 22 (2pm ET), with the BoE verdict at midday GMT on March 23 (8am ET).

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