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Apr 29 - 08:55 AM

GBP/USD - COMMENT-GBP/USD May Hit 1.42 If BoE Springs Taper Shock

By Rob Howard  —  Apr 29 - 07:18 AM

GBP/USD might jump towards 1.42 if the Bank of England follows in the Bank of Canada's footsteps and springs a hawkish shock next week by announcing that it is tapering its QE programme.

Cable was last around 1.42 on Feb.
24 when it scaled a three-year peak of 1.4240.

NatWest analysts believe the BoE could announce a 4 billion pound reduction in its QE programme on May 6, trimming it to 14 billion pounds a month. nL8N2ML3N2

If it does, it would contrast with Wednesday's dovish message from the Federal Reserve, when Chair Jerome Powell said it was too early to talk about tapering. nL1N2MK0XOnL1N2MM01S

The CAD racked up its biggest daily gain since June 2020 after the BoC set the taper ball rolling last week. nL1N2ME1G6

GBP/USD rose to 1.3979 on Thursday, its highest level since April 20, courtesy of the Fed's dovish steer.

May 6 is also the date of the Scottish parliamentary election -- which may impact the pound. nL1N2ML12Y

Related comments: nL1N2MJ0I7nL1N2MK0HC

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Source:
Refinitiv IFR Research/Market Commentary

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