The rising dynamics of the pound is rapidly gaining momentum at the beginning of the European trading session before the publication of important macroeconomic statistics for the UK. The pound / dollar is actively testing resistance in the 1.32 area, aiming for Friday’s high at 1.3224 area. Euro / pound has updated the monthly low at 0.9064.
At 11.30 the inflation report for August will be published and, according to forecasts, in the annual ratio the indicator increased to 2.8% compared to 2.6% in July. In addition, at the same time there will be a series of statistics on the housing market, anticipating the main event of this week – a meeting of the Bank of England on Thursday. Given the increased inflationary pressure from the regulator, more aggressive rhetoric is expected, perhaps this time more convincing. “The pound continues to grow, as investors begin to take a more serious attitude toward a possible change in the exchange rate,” analysts of ING note.
Lee Hardman of MUFG believes that the pound is growing quite deservedly – from heavily resold levels. The signs of rising inflation and other positive statistics will convince the Bank of England of the stability of economic growth, despite Breckzit. “It’s hard to say why the senior economist of the Bank, Andy Haldane, did not vote for the rate hike in August, although he previously supported this idea. This brings some uncertainty to the outcome of the vote this week. In addition, Dave Ramsden will participate in the voting for the first time and, it is possible that we will get another supporter of the increase. In general, the events of this week should contribute to the strengthening of the pound, “- noted in the MUFG.
On the other hand, Dominique Briand of BNP Paribas believes that a relatively weak economic growth and political uncertainty will not allow the Bank of England to move to a tightening of monetary policy before the end of 2018.