RationalFX: Investors will turn their eyes towards Thursdays Bank of England meeting to see if the central bank will deliver a market moving surprise by deciding to raise interest rates,
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market expectations for the possible hike have slipped significantly over the past two weeks.
The uncertainty surrounding the Omicron variant and the prime minsters decision to tighten Covid restrictions and also advising people to return to work from home from today are also seemingly having a negative impact on Sterling. This certainly provides a good reason for the Bank of England to hold off in December and see a move most likely in February as Members of the Bank’s Monetary Policy Committee have signaled clearly that some tightening of monetary policy will be required in the near future.
We also saw weaker than expected UK GDP numbers on Friday with the economy growing just 0.1% MoM in October versus forecasts for 0.4% growth and this didn’t seem to cause major moment in sterling euro and will only see a move most likely after Thursdays meeting. Markets are now pricing in a 38% probability of a 15 basis point rate hike next week during the European morning, compared with 46% on Wednesday and nearly 70% at the start of last week.
Source : ETFWorld.co.uk
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