BUZZ-COMMENT-Sterling slips as sideways data tempers BoE hike expectations

Credit: REUTERS/LEONHARD FOEGER

Sterling traders remained reluctant on Friday to push the pound beyond recent ranges, still engaged in a tug-of-war between key resistance at 1.3831, the 50% Fibo of the 2021 range of 1.4250-1.3412, and the daily cloud base at 1.3778.

Oct 22 (Reuters) - Sterling traders remained reluctant on Friday to push the pound beyond recent ranges, still engaged in a tug-of-war between key resistance at 1.3831, the 50% Fibo of the 2021 range of 1.4250-1.3412, and the daily cloud base at 1.3778.

Bears found no joy probing below the daily cloud, after UK retail sales disappointed . Bulls on the other hand ran into resistance at 1.3815 after UK PMIs beat forecasts.

The recent failures above 1.3830 may hint a top has been put in for GBP/USD. Despite recent hawkish leanings by some BoE members, new chief economist Huw Pill said he expects inflation to rise to 5% in early 2022, and then recede in H2 2022, the FT reported https://on.ft.com/3B3OIQY.

Pill also said “maybe there’s a bit too much excitement in the focus on rates right now,” and while he considers the November meeting live, he sees no need for restrictive settings that exceed 0.75%.

The key driver for recent GBP/USD gains has been rising expectations of an early UK rate rise BOEWATCH. Should the BoE blink on higher rates at the Nov. 4 MPC meeting, GBP/USD is likely to reverse recent gains putting 2021 lows by 1.3412 in sharper focus.

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GBP Chart: https://tmsnrt.rs/3niEkzP

(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

((Paul.Spirgel@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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