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FOREX: Slipping Sterling Puts Cable on Course for 50-dma

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  • A dovish appearance from BoE's Bailey in this morning Guardian newspaper helped trigger a phase of dovish Bank of England re-pricing. OIS markets now price close to 45bps of easing for the rest of 2024, up from 37bps as of yesterday's close after Bailey stated that rates could be cut more aggressively if inflation stayed subdued. As a result, GBP/USD corrected lower to take out recent lows of 1.3237, taking out support to touch new pullback lows of 1.3106. This puts the pair on course for a test of the 50-dma at 1.3070 in the near-term, with a 300 pip gap now opened with the September high.
  • The comment raise the focus on the September CPI print due on  Oct 16th - a soft read should prompt markets to more aggressively price back-to-back 25bps rate cuts for the remainder of this year - keeping the BOE on course with the Fed and ECB, and leaving less risk of yawning rate differentials.
  • While GBP is the weakest currency in G10, the greenback is the firmest, as this week's weakness in the EUR boosts the USD Index back toward the 102.00 handle - and through the 101.859 50-dma. This puts the currency at the highest level since early September. Strong jobs data today and tomorrow would extend the short-term streak of higher highs and higher lows.
  • Weekly jobless claims data crosses today, alongside the ISM services index for September - both of which provide the last look at inflation ahead of Friday's payrolls print. Fed's Kashkari, Bostic and Schmid are also set to make appearances. 
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  • A dovish appearance from BoE's Bailey in this morning Guardian newspaper helped trigger a phase of dovish Bank of England re-pricing. OIS markets now price close to 45bps of easing for the rest of 2024, up from 37bps as of yesterday's close after Bailey stated that rates could be cut more aggressively if inflation stayed subdued. As a result, GBP/USD corrected lower to take out recent lows of 1.3237, taking out support to touch new pullback lows of 1.3106. This puts the pair on course for a test of the 50-dma at 1.3070 in the near-term, with a 300 pip gap now opened with the September high.
  • The comment raise the focus on the September CPI print due on  Oct 16th - a soft read should prompt markets to more aggressively price back-to-back 25bps rate cuts for the remainder of this year - keeping the BOE on course with the Fed and ECB, and leaving less risk of yawning rate differentials.
  • While GBP is the weakest currency in G10, the greenback is the firmest, as this week's weakness in the EUR boosts the USD Index back toward the 102.00 handle - and through the 101.859 50-dma. This puts the currency at the highest level since early September. Strong jobs data today and tomorrow would extend the short-term streak of higher highs and higher lows.
  • Weekly jobless claims data crosses today, alongside the ISM services index for September - both of which provide the last look at inflation ahead of Friday's payrolls print. Fed's Kashkari, Bostic and Schmid are also set to make appearances.