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Sterling Highs, Yen Lows – Will BoE implement Rate Hikes?

Sterling Highs, Yen Lows – Will BoE implement Rate Hikes?

For the early part of last week, we once again saw investors holding a cautious tone, with higher levels of market confidence displayed towards the end of the week. The Japanese yen was a notable underperformer with USD/JPY moving by a rather hefty 1% to a 3 year low, this coincided with the improvement in risk appetite. 

Sterling registered some gains last week, and continues to edge slightly higher this morning. This is due to markets speculating the possibility of a BoE rate hike before year end. EUR/GBP traded to a 20-month low of 84.3p and GBP/USD moved back up to the $1.37 mark. Elsewhere, EUR/USD was in the upper half of the $1.15-1.16 band for most of the week.

As we turn our focus to this week, the Friday release of the flash PMIs for October from the US, Eurozone and UK will be one the main data highlights. With sterling showing strength, traders will look to survey data for any additional signs of weakness in the economic recovery for the UK. CPI and retail sales for the UK, as well as a speech by BoE Governor Bailey will also receive attention – traders will be alert regarding the speculation around an early UK rate hike.

 

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