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Nov 11 - 11:55 AM

GBP/USD - COMMENT-Sterling Treks Higher As Rate Convergence Prods Short-Covering

By Paul Spirgel  —  Nov 11 - 09:55 AM

GBP/USD edged higher on Friday, extending recent gains to a 2-1/2-month high of 1.1795 in early NorAm as the reduction of Fed rate-hike expectations following Thursday's U.S. CPI data left cable poised to move higher still as sterling shorts unwind.

The road higher for GBP/USD began after the BoE took steps to stabilize the gilt market and the new government of PM Rishi Sunak and finance minister Jeremy Hunt restored confidence in UK fiscal policy.

Against that backdrop, Thursday's CPI and the subsequent U.S.-UK rate convergence is boosting GBP/USD as shorts unwind positions put on after the previous government's mini-budget fiasco and the BoE's dovish shift in March.

Nearby upside targets for GBP/USD are the Aug.
26 high at 1.19 and 1.2038, the 50% Fib of 1.3749-1.0327, the 2022 range.

A well-received autumn statement by Jeremy Hunt on Nov.
17, amid the current less-hawkish Fed hike outlook is likely to lift GBP/USD above the 50% Fib at 1.2038, putting early August highs by 1.23 in sharp focus.

For more click on FXBUZ


Source:
Refinitiv IFR Research/Market Commentary

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