Pound Climbs On BoE Vlieghe's Rate Hike Forecasts
22 May 2018 - 5:39PM
RTTF2
The pound strengthened against its major opponents in the
European session on Tuesday, after the Bank of England policy maker
Gertjan Vlieghe said that UK interest rates are likely to rise by
25 to 50 basis points every year over a three-year forecast period,
bringing policy rate closer to neutral.
Speaking to the Treasury Committee, Vlieghe said his own
prediction for growth and inflation is consistent with a gradually
rising path of interest rates.
"My own central projection will require one or two quarter point
rate increases per year over the three-year forecast period."
"That path would bring us closer to the neutral policy rate,
which I continue to think is likely to be well below the neutral
rate that prevailed before the recession," he added.
Data from the Office for National Statistics showed that the UK
budget deficit narrowed in April.
Public sector net borrowing, excluding public sector banks,
decreased GBP 1.6 billion to GBP 7.8 billion in April. This was the
lowest April net borrowing since 2008. The expected level was GBP
8.5 billion.
The currency was trading in a negative territory against its
major opponents in the Asian session, with the exception of the
euro.
The pound appreciated to a 4-day high of 1.3491 against the
greenback, from a low of 1.3413 hit at 2:30 am ET. The next
possible resistance for the pound is seen around the 1.36
level.
Having fallen to near a 2-month low of 1.3367 against the Swiss
franc at 12:30 am ET, the pound reversed direction and climbed to
1.3434. Next key resistance for the pound is likely seen around the
1.36 level.
Following a 5-day low of 148.77 hit at 10:00 pm ET, the pound
reversed direction and spiked up to 149.73 against the yen. The
pound is poised to challenge resistance around the 151.00
level.
Preliminary data from the Chain Store Association showed that
Japan's supermarket sales dropped in April from a year ago.
Supermarket sales, after store adjustment, decreased 1.2 percent
year-over-year in April. Before adjustment, sales fell 0.3
percent.
Reversing from an early weekly low of 0.8789 against the euro,
the pound strengthened to 0.8758. The pound is likely to find
resistance around the 0.86 level.
Looking ahead, at 8:30 am ET, Canada wholesales for March are
scheduled for release.
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