Sterling's struggles continue after GBP/USD struck a fresh 3-week low of 1.2955 in early European trade nL1N29J09I, with the BoE clouding an outlook that was already made murky by post-Brexit talksnB5N28000I.
Concerns about UK growth and inflation remain at center stage after stealing the spotlight from Brexit, as recent BoE rhetoric leaned toward lower rates. Weak data, with inflation below the BoE's 2% target at 1.5% and Monday's -0.3% Nov.
GDP data may keep the downward pressure on the BoE rates outlook.
Data BOEWATCH on Eikon indicates a 46% chance of a BoE cut at Carney's final meeting on Jan.
With Brexit moving forward on Jan. 31, the BoE may take this period of relative calm, ahead of its change of leadership and potentially turbulent EU-UK negotiations to proffer accommodation to jumpstart a stalling UK economy. GBP/USD has already reversed all of its Brexit-related post-election rise, leaving growth and rate prospects to drive GBP/USD pricing.
A dip below 1.2900-1.2899, the Dec. 25 low and lower 30-day Bolli support opens the way for further declines toward the 100-DMA at 1.2769 and the 200-DMA at 1.2690.
Wednesday's UK CPI EM data will be keenly watched to see if recent dovish tones by BoE members will lead to a formal change in policy.
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