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Jun 22 - 01:55 PM

GBP/USD - COMMENT-Sterling Post-CPI Rebound Puts Trend High Near 1.24 In Focus

By Paul Spirgel  —  Jun 22 - 11:45 AM

GBP/USD rose on Wednesday, recovering from a slide to by 1.2163 brought on by the UK's 9.1% inflation reading stoking recession fears, as traders bought the dip on expectations that the BoE would accelerate near-term rate hikes, which may temporarily boost sterling toward trend highs by 1.24.

But the data failed to dislodge GBP/USD, which remains caught between lower 30-day Bolli support at 1.2091 and the 30-day moving average at 1.2415 and traders may have to await more data and the BoE's Aug.
4 meeting for policy direction.

Rates fell on Wednesday, but GBPOIS indicates near-term rate rises totaling 95bps by September and 173bps by December after markets recently ratcheted higher bets on hikes this year and an acceleration from the recent 25bps-per-meeting pace, which should anchor GBP/USD near current levels.

But the recession fears accompanying Wednesday's inflation data has pushed rates across the 3-month Sonia curve lower with the high point of rates coming in June 2023 at 3.28%.

After that 3-month rates fall to 2.65% in H2 2025.
The pace of BoE cuts in the absolute, and relative to other central banks may put the 2022 low at 1.1943 and the March 20 2020 low at 1.1413 in focus.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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