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May 30 - 07:55 AM

GBP/USD - COMMENT-GBP/USD May Not Pause Until 1.30 If The BoE Doesn't

By Rob Howard  —  May 30 - 06:15 AM

Cable might add to its recent gains if expectations grow that the Bank of England won't pause its rate-hiking cycle in the autumn while the Federal Reserve will, with 1.30 among bull targets.

The 15 billion pound household support package unveiled by the British government last Thursday - three days after Fed policymaker Raphael Bostic got the ball rolling on a possible pause in tightening in September - has caused a hawkish shift in BoE expectations. nL5N2XI0ZO

A 2.25% BoE rate is currently priced in for December, according to a Refinitiv measure based on interest rate futures.
Five consecutive quarter-point hikes would be one way to get there. BOEWATCH

Friday's CFTC data showed IMM speculators maintained a big net GBP short position in the week ended May 24; 80,372 contracts. nL1N2XM0BZ

If some of those shorts are squeezed out, it could help juice GBP/USD towards 1.30.
The pair scaled a one-month peak of 1.2666 on Friday, two weeks after plumbing a two-year low of 1.2156.

Related comment: nL2N2XG0K5

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Source:
Refinitiv IFR Research/Market Commentary

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