GBP Hit By BoE Inflation Outlook

Daily FX Wrap

GBP hit as BoE lowers inflation forecasts and Forbes remains the lone dissenter, while a neutral RBNZ thwarts hawkish calls and pushes NZD to 7-month lows.

Not so ‘super’ Thursday for GBP with hard data in the form of construction, industrial and manufacturing figures all falling short of analyst estimates, which pressured GBP through 1.29. The move to the downside was further exacerbated by the Bank of England QIR, which showed a 7-1 vote split (Forbes dissenting), consequently GBP dipped amid an unwind of speculators hinting at a possible 6-2 split with Saunders accompanying Forbes. Additionally, the central bank had lowered their medium and long term inflation forecasts, weighing on GBP to test 1.2850.

USD-index popped higher on the PPI and weekly jobless claims beat, subsequently pushing USD/JPY to two month highs. Although, offers layered in the pair at 114.40 through to 114.50 curbed further advances, while the upside had been short-lived with the USD slipping through 114.00 to test 113.50 to the downside amid the slip in US yields in response to the soured sentiment observed shortly after the Wall St. open.

Over to commodity currencies, NZD lower by over a percent, to trade at 7-month lows as the RBNZ dispelled hawkish speculation by stating that accommodative monetary policy will remain for a considerable amount of time, while Governor Wheeler noted that inflation expectations will have to rise in order to consider tightening. CAD continues to soften with USD/CAD meandering around 1.3700, the impetus this time caused by Moody’s downgrading 6 Canadian banks, which was prompted by weakening credit conditions in Canada.

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