GBP: BoE to keep rates on hold tomorrow – ING

UK inflation for August came in perfectly in line with consensus this morning. The numbers confirm that the Bank of England should keep rates on hold tomorrow, ING’s FX analyst Francesco Pesole notes.

CPI numbers confirm BoE to keep on hold

“This morning’s numbers all but confirm that the Bank of England should keep rates on hold tomorrow. There is a residual 6bp of easing priced though for the meeting, suggesting a bit more room for short-dated Sonia swap rates to readjust higher, after falling throughout September.”

“The GBP is trading on the front foot after CPI data and may find a bit more support tomorrow.”

“The FOMC event today may be a bigger event for GBP markets. A 25bp cut can send GBP/USD back below 1.3100, but if Powell is as dovish as we expect, Cable may well find good support before touching the recent 1.3015 lows.”