GBP/USD to Take Cues From FOMC/BoE Interest Rate Outlook

GBP/USD to Take Cues From FOMC/BoE Interest Rate Outlook

Fundamental Forecast for a British Pound: Neutral

  • British Pound Stays Near One-Month High on Better-Than-Expected UK Q4 GDP
  • GBP/USD Technical Analysis: Fresh Highs After ’Brexit Ruling’
  • Still No Post-Brexit Hangover For UK Economy, Pound Climbs

Sign adult for David’s e-mail placement list.

The Federal Reserve’s initial seductiveness rate preference for 2017 might beget singular seductiveness as Chair Janet Yellen and Co. are widely approaching to keep a stream policy, yet a Bank of England’s (BoE) ‘Super Thursday’ eventuality might shake adult a near-term opinion for GBP/USD should Governor Mark Carney and Co. uncover a larger eagerness to gradually pierce divided from a easing-cycle.

With Chicago Fed President Charles Evans, Philadelphia President Patrick Harker, Dallas Fed President Robert Kaplan and Minneapolis Fed President Neel Kashkari fasten a Federal Open Market Committee (FOMC) in 2017, a organisation of new voting-members are expected to side with a infancy and hang with a standing quo following a 25bp rate-hike in December. In turn, some-more of a same from a FOMC might hint a muted marketplace reaction, and a U.S. Non-Farm Payrolls (NFP) news might share a identical predestine as practice is expected to boost 170K in January, while Average Hourly Earnings are projected to pullback from a fastest gait of expansion given 2009.

Nevertheless, seductiveness rate expectations seem to be defence to a recent array of churned information prints entrance out of a U.S. economy as Fed Fund Futures continue to prominence a 70% luck for a June-hike, and a dollar might sojourn upheld via 2017 as a FOMC appears to be on march to serve normalize financial routine over a entrance months. With that said, it seems as yet a bar stays high to snap a bullish view surrounding a greenback generally as Chair Yellen sees a executive bank ‘closing in’ on a twin mandate.

In a U.K., Parliament starts a two-day discuss on a ‘Brexit’ routine only forward of a BoE seductiveness rate preference on Feb 2, with a British Pound during risk of confronting near-term headwinds as a region’s depart from a European Union (EU) clouds a opinion for expansion and inflation. However, a Monetary Policy Committee (MPC) might continue to dump a dovish tinge and echo cost expansion will

‘overshoot a aim after in 2017 and by 2018’ as U.K. consumer prices enhance during a fastest gait given 2014.

GBP/USD to Take Cues From FOMC/BoE Interest Rate Outlook

As a result, a uninformed updates to a quarterly acceleration news (QIR) might corrupt a bearish view surrounding a British Pound and fuel a near-term allege in GBP/USD should executive bank officials serve highlight ‘there are boundary to a border to that above-target acceleration can be tolerated.’

For More In-Depth Updates, Join DailyFX Currency Analyst David Song for Weekly LIVE Analysis Overview!

About author