Pound Rally Pauses Ahead of BoE Decision

(MENAFN- Daily Forex) The Pound Sterling consolidated gains ahead of today's Bank of England decision and is currently trending lower against the US Dollar. Analysts are predicting that the BoE's Monetary Policy Committee will hike the current benchmark interest rate by 25 basis points to 0.50%; that would make the increase the first in nearly 10 years. Markets have generally priced just such an eventuality into the Pound already, so what traders will be watching for is Mark Carney, the BoE Governor, to perhaps signal more rate hikes over the next several months. Earlier today, October's PMI Construction figures were released, and they were surprisingly upbeat with a reading of 50.8 against a 48.0 predicted.

As reported at 10:07 am (GMT) in London, the GBP/USD was trading at $1.3244, down 0.04%, and moving well off the session peak of $1.3299; the pair had earlier hit a trough of $1.3249. The EUR/GBP is trading at 0.8793 Pence, a gain of 0.26%; the pair has ranged from a low of 0.87670 Pence to a peak of 0.87961 Pence.

Inflation Outlook Key to Future

Though expectations are hopeful that the BoE will hint at more rate hikes, many analysts believe that this is likely to be the one and only rate hike for some time given the political uncertainty of the Brexit negotiations and the recent mixed bag of economic data. What one FX strategist is expecting is a 'dovish hike, meaning one increase and the BoE is done. Then, he says, the release of the quarterly Inflation Report by the BoE (which also comes out today) will be scrutinized with a view to gauging the inflation outlook, at which time the way the MPC voted is likely to be more highly considered.

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