Fed, BoE cocktail could shake and stir GBP/USD
Sept 10 (Reuters) -Cable will be impacted by interest rate decisions and monetary policy guidance from the Federal Reserve and Bank of England next week, with the reaction to be magnified if there is a dovish surprise from either - or both.
GBP/USD might jump towards 1.33 if the Fed cuts rates by a larger than expected 50 basis points on Sept. 18, and/or drop towards 1.29 if the BoE defies the consensus and cuts rates a day later.
Markets currently see a 27% chance of a half-point Fed cut next week, when a 25 bps reduction is fully priced, and a 22% chance of a 25 bps BoE cut on Sept. 19 (a quarter-point BoE cut is fully priced for November). 0#BOEWATCH
Cable was last at 1.29 on Aug. 16 - a week before Governor Andrew Bailey said further BoE rate cuts would not be rushed and Fed Chair Jerome Powell said the 'time has come' to cut rates. It was last at 1.33 in March 2022.
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(Robert Howard is a Reuters market analyst. The views expressed are his own)
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