Strong ADP release Wednesday, along with position adjustments to long cable positions ahead of today’s BOE rate/QE decision saw rate under pressure through the NY session, trading to extended lows of $1.5014 into the close. This move lower was extended further as Asian traders reacted to an FT report suggesting Chancellor Osborne to announce further powers to incoming BOE Governor Carney at the Mar20 Budget. Options include giving the MPC greater time to bring inflation back to the 2 per cent target, giving the BoE a Federal Reserve-style dual mandate to target both employment and inflation, and even targeting cash spending in the economy rather than inflation. Rate dropped through recent lows of $1.4985 to $1.4965 but met decent demand linked to option interest ahead of $1.4950. Rate recovered through the balance of the session to $1.5018, holding around $1.4995/1.5010 into Europe. BOE MPC announcement at 1200GMT, market mainly looking for no change in rates/QE, though are open to a possible QE extension following the last meeting Minutes which showed King moving to the extension camp. Resistance seen between $1.5015/25, more between $1.5040/50. Support $1.4965/60, stronger toward $1.4950.
EasyForexNews Research Team