GBP/USD weaker, breaches 1.3100 on Carney
- GBP remains offered on BoE’s ‘dovish hike’.
- UK 10-year yields breaks below 1.29%, 2-week lows.
- BoE sees CPI peaking in October 2017.
The selling pressure around the Sterling remains well and sound on Thursday following the BoE meeting and the press conference by Governor M.Carney, all relegating GBP/USD to test fresh lows in sub-1.3100 levels.
GBP/USD interim support at 1.3070 (low Oct.27)
Cable remains on the defensive after the ‘Old Lady’ raised the key rate for the first time in a decade, although it left unchanged the bond-buying programme at £435 billion.
The MPC members voted 7-2 favouring higher rates, while the vote to leave the asset purchase facility intact was unanimous. MPC members Cunliffe and Ramsden voted to leave rates on hold.
Following the BoE’s inflation report, the central bank sees inflation peaking in October 2017 at above 3%, while it sees two more rate hikes over the forecast horizon.
At his press conference, Governor M.Carney stressed that Brexit poses the largest risks for the economic growth outlook, adding that growth is now slower but not subdued. Furthermore, Carney said today’s rate hike aims to prevent the return of the inflation squeeze on UK income.
Carney added that gradual rate hikes should prompt inflation to fall back in the next months.
GBP/USD levels to consider
As of writing the pair is losing 1.00% at 1.3113 facing the next support at 1.3086 (low Nov.2) seconded by 1.3081 (100-day sma) and finally 1.3070 (low Oct.27). On the flip side, a breakout of 1.3299 (high Nov.2) would aim for 1.3338 (high Oct.13) and then 1.3499 (2014-2017 resistance line).