Foreign Exchange Daily Market Update 19/02/2018

Mon, February 19, 2018

This week may be make or break for the pound as speculation that the BOE will raise rates in May.  

Pound’s strength may be driven this week by economic data that could determine whether the BOE will raises interest rates by May.

As U.K. employment figures are scheduled for Wednesday, it is expected that wages have increased and is likely to push the pound higher as it pushes inflation beyond the post-Brexit level. GDP figures due on Thursday are expected to an increase of 0.5% in the fourth quarter. Analysis are saying that there is a 78% chance that the BOE will raise rates by May.

Sterling posted a weekly gain against the dollar for the first time this month. It rose back above $1.40 after the Monetary Policy Committee’s decision on Feb. 8 increased speculation of higher borrowing costs in the first half of this year. Inflation is also steady at 3%, well above the central bank’s target.

The pound rose 1.6% last week to $1.4042 on Friday evening against the dollar, after falling 2.4% in the two weeks prior. GBP had little change against the Euros at 1.124, after a two-week drop.  

Data to look out today.   

Not much data due out today.

• Employment data mark cornerstone for wage-led inflation
• Money markets suggest 78 percent chance of rate hike by May

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