British Pound & US Dollar going head to head
9:40 PM (EST) Update
With mostly a quite global market today, let's focus on stuff coming up in the next few days and take a look at Mr. British Pound as he dances against Ms. USA on the forex dance floor, he's been quite a competitor to Ms. USA recently with both showing strong signs in their dance moves. Who's going to win? Will we see more upside in the GBP/USD in the coming months?
Bank of England's official bank rate votes and their minutes are scheduled to be out on Wednesday followed by UK's June retail sales report on Thursday.
Forex traders with a special interest in Mr. British Pound are probably eager to see if any hawkish members voted to hike interest rates in July by taking an analytical look at the monetary policy committee meeting minutes on Wednesday.
A bunch of MPC members used to vote for a 0.25% increase in rates when the U.K. economy had been doing mighty fine back in the latter half of last year. A quick review of the latest set of reports shows that the Brits have been making a lot of improvements so there’s a chance that these MPC members might bring on their hawkish feathers once more.
Aside from that, BOE Governor Carney himself seems pretty upbeat and ready to join the hawks since he mentioned that “the point at which interest rates may begin to rise is moving closer” in last week’s Inflation Report hearings. If his upbeat comments on strong wage growth and above-trend economic performance are echoed by several BOE committee members, Mr. British could bring some sick up moves to the dance floor.
So, will Mr. Carney continue to be upbeat? We could get more clues on this with this week's retail sales report. For the month of June, the U.K. is expected to show a 0.4% increase in retail sales. So far, inflation has been unchanged and wage growth has picked up to many economic analysts might be even gearing up for an upside surprise.
So with this, will be see a UK rate hike soon? Which one will come sooner: the US or the UK interest rate hike? There is a pretty tight competition between Mr. British Pound and Ms. USA on the forex dance floor!
British pound has fallen inside an upside channel, remaining above the Ichimoku cloud but failing to to break above the 50% Fibonacci level. We could expect the pair to continue dancing within the channel until we get a fundamental surprise either from the US or the UK.
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