Pound gains as Saunders float hawkish remarks
BOE Saunders says ending QE is a possibility in the forthcoming meetings and that rate hikes could follow next year
That has seen cable come to life in a move from 1.3840 to a session high of 1.3884 as buyers also push for a move above the 100-hour moving average (red line):
But Saunders’ remarks today had a bit more detail and that they are viewing the risks to be skewed to the upside, noting that risk considerations are increasing especially if the central bank continues QE when inflation is above 3% and output gap closed.
He even stated that considerations to end QE will be part of their discussions moving forward and did not shy away from detailing how rate hikes will play out next year.
A lot of this has been implicit prior to this and it had certainly been in the market’s think tank but now we’re starting to see policymakers be more open/suggestive to it.
That said, there needs to be more talk on this moving forward by the BOE for the pound to sustain any real upside momentum.
Despite the push higher, cable still largely sits between the range of 1.3800 and 1.3900 this week and the latter in particular has put a lid on price action over the past two weeks.
Just above that is the 100-day moving average @ 1.3923 adding further resistance.
For cable buyers, those are the technical levels to breach to establish a fresh leg higher.