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Nov 03 - 11:55 AM

GBP/USD - COMMENT- Sterling Data-Related Gains Tempered Pre-Fed, BoE Rate Decisions

By Paul Spirgel  —  Nov 03 - 10:33 AM

Sterling received a boost in early U.S. trade, rising to 1.3663 from 1.3623, before slipping back near 1.3845, helped by unexpectedly strong U.S. ADP jobs data, which is seen making it easier for the Fed to remove accommodation and, therefore, help nudge the BoE toward hiking.

Adding to bullish GBP overtones, the Times shadow MPC recommended a rate hike on Thursday nL1N2RU0YV, UK services were revised higher from the flash reading and GBPOIS BOEWATCH is now attaching 66% odds for a UK rate hike Thursday.

In the near-term, short-sterling futures 0#FSS: indicate UK rates are expected to rise to 1.35% by December 2022, while U.S. Eurodollar rates are seen rising to 0.84% by December 2022 0#ED:.

Should UK rates rise faster than U.S. rates, as futures suggest GBP/USD is likely to rise above daily cloud top resistance at 1.3698, putting September highs by 1.3913 and late July's double top by 1.40 in focus as it mounts a run at the 2021 high by 1.4250 hit on June 1.

A delay in UK policy normalization puts recent support by 1.3600 in focus, as GBP/USD bears will likely target 2021 lows by 1.3412.

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Source:
Refinitiv IFR Research/Market Commentary

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