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11 Feb 2015

GBP bumps higher this morning in advance of BOE Inflation Report

United States Dollar: GBP/USD came close to breaking through 1.53 yesterday but failed and promptly tumbled during the late afternoon session. The dollar was generally stronger in New York as various technical levels in USD/JPY were knocked out. There wasn’t much by way of data to support the move but GBP/USD ended up trading to a low of 1.5218 last night. The Bank of England Inflation Report is due this morning and Governor Carney is due to hold a press conference following. The market isn’t expecting too many surprises and for the bank to sound as dovish as usual given the threat posed by low inflation and the problems associated with the Eurozone economy currently. It will also be the first report issued since both McCafferty and Weale changed their vote from a rate hike to no change. That all said, the outlook for inflation may be a little more positive in the bank’s view but we’ll hear more come 10:30 this morning. GBP/USD has bumped higher in advance of the report and trades at 1.5242 currently. Later on today US retail sales data is due and this could further influence the value of GBP/USD.

We expect a range today in the GBP/USD rate of 1.52180 to 1.5320

Euro: Despite the dollar strength yesterday, EUR/USD has pushed slowly higher throughout the last 24 hours and opens this morning at 1.1335. Investors were encouraged by promising talks between Greek and Eurozone officials yesterday regarding any extension to the country’s bailout programme and its terms. The talks broke down at the final hurdle but it was at least the first ‘proper’ round of talks and there is now likely to exist a framework for further talks over the next few days. The single currency is also stronger vs. the pound this morning and GBP/EUR is back below 1.35 after reaching a multi-year high of 1.3539 yesterday.

We expect a range today in the GBP/EUR rate of 1.3400 to 1.3500

Aussie and Kiwi Dollars: AUD/USD dropped again overnight, this time in reaction to weaker than expected employment data. The data showed that unemployment rose to its highest level in thirteen years in January to 6.4%. The total number of people in work also fell by 12,200 vs. expectations for a fall of 4,700. AUD/USD gapped from .7726 to .7657 on the news and it went on to trade to a low of .7640 overnight. NZD/USD has fallen too, albeit less violently than AUD/USD and it opens in London at .7360.

We expect a range today in the GBP/AUD rate of 1.9780 to 1.9950

We expect a range today in the GBP/NZD rate of 2.0640 to 2.0820

Data Releases

AUD: RBA Gov Stevens Speaks

EUR: Industrial Production m/m, EU Economic Summit

GBP: BOE Gov Carney Speaks, BOE Inflation Report

NZD: FPI m/m

USD: Core Retail Sales m/m, Retail Sales m/m, Unemployment Claims, Business Inventories m/m

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