GBP/USD reverses BoE rate hike expectations bid - Scotiabank

Ross J Burland FXStreet

While GBP/USD has turned offered on the back of strong US data, (US Dollar jumps to fresh highs near 94.50), analysts at Scotiabank explained that the pound was extending Monday’s modest gains earlier and climbing to the mid/upper-1.31 area on the back of a firming in domestic rate expectations ahead of Thursday’s BoE.

Key Quotes:

"Market participants are pricing a 90% chance of a hike on August 2nd and a slightly tighter path for 2019, delivering a GBP-supportive narrowing in interest rate differentials."

"Measures of sentiment remain conflicted however, reflecting lingering Brexit concerns with a clear divergence in risk reversals around the 6 month horizon."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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