Sterling eyes break of 1.30 ahead of Jackson Hole
Aug 19 (Reuters) -The current backdrop of a soft dollar has pushed cable within close proximity of the 1.30 handle, which protects the year-to-date high at 1.3045.
Last week’s dovish inflation report, whereby the closely watched services CPI fell to 5.2%, undershooting the Bank of England’s projection by 0.4 percentage point, has opened the door to a September rate cut. Currently, markets have attached a 37% probability of such action 0#BOEWATCH.
That said, this will up the ante for BoE Governor Andrew Bailey’s upcoming speech at Jackson Hole, scheduled for Friday. Before then, the flash PMI figures will be a key input for the central bank’s policy outlook.
For now, with the lack of data in the beginning of the week, external factors should continue to drive cable, which given the firmer risk tone. Alongside the fact that the U.S. looks little less exceptional – with the Atlanta Fed GDP model falling to 2% from 2.4% – there is a clear appetite to press higher with cable in the lead up to Jackson Hole.
However, as has been seen over the last two years, maintaining a hold above 1.3000 has been a stretch too far for the pair.
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GBPUSD daily chart https://tmsnrt.rs/3yGDSVT
(Justin McQueen is a Reuters market analyst. The views expressed are his own.)
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