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GBP Trades In Volatile Manner Amid BOE Headlines, Markets Await US CPI

FOREX
  • Volatility in GBP was the clear focus for currency markets in early Wednesday trade as headlines from the Bank of England prompted significant two-way price action.
  • Approaching the London open, there was a significant spike in sterling crosses as the Financial Times reported that “the Bank of England has signalled privately to bankers that it could extend its emergency bond-buying programme past this Friday’s deadline." Cable popped aggressively to 1.1057 from around 1.0950.
  • However, the pair drifted lower as the European session commenced and came under further pressure as the following headline was run: BOE Spokesperson Says Bond-Buying Scheme Still To End Friday.
  • Cable fell to a low of 1.0955 on the news but was unable to gather any downside momentum. Failing to bridge the gap with the lows of the day, GBP once again reversed aggressively as short-term positioning continues to be frustrated, eventually printing another fresh high for the day at 1.1062. Overall, we note that technically, the recent move lower still appears to be a correction of the rally between Sep 26 - Oct 5.
  • Elsewhere, currency markets remain subdued with the USD index unchanged and major pairs holding relatively narrow ranges. USDJPY continues to consolidate above 146 after breaking to fresh cycle highs (146.39) overnight.
  • Plenty of speeches are scheduled from Fed, ECB & BoE policymakers, with the minutes from the most recent FOMC meeting also due. The clear focus for global markets remains on tomorrow’s release of US CPI.
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