Recent economic data from the UK has fuelled speculation that the Bank of England is starting to consider pausing interest rate hikes in the UK. Furthermore, some recent speeches from MPC members, have added fuel to this speculation. BoE’s Governor Bailey recently said that monetary policy is much nearer now to the top of the cycle, BoE’s Cunliffe pointed to mixed signals about the economy, and dovish Dhingra said that the policy is already sufficiently restrictive.
The latest GDP data has seen a sharp contraction in the UK economy and terminal rate expectations have fallen from over 6% a few weeks ago to 5.55% at the time of writing. In some rapid re-pricing short-term interest rate markets are only seeing a 67% chance of a 25bps hike next week and a 33% chance of a hold.
So, with GBP weakness potentially ahead, the seasonal weak period for the GBPUSD is quite noticeable. Over the last 15 years, between the 20th of September and the 9th of October, the GBPUSD has fallen over 85% of the time for an average fall of 1.75%. With the Federal Reserve meeting on the 20th of September - could a hawkish message from them send the GBPUSD sharply lower? It is certainly something to look out for!
Major Trade Risks: The major trade risks here would be an improvement in the UK’s economy, a rise in inflation for the UK, or a very dovish Federal Reserve meeting next Wednesday.
Disclaimer: Past results and past seasonal patterns are no indication of future performance, in particular, future market trends. seasonax GmbH neither recommends nor approves of any particular ...
Disclaimer: Past results and past seasonal patterns are no indication of future performance, in particular, future market trends. seasonax GmbH neither recommends nor approves of any particular financial instrument, group of securities, segment of industry, analysis interval or any particular idea, approach, strategy or attitude nor provides consulting nor brokerage nor asset management services. seasonax GmbH hereby excludes any explicit or implied trading recommendation, in particular, any promise, implication or guarantee that profits are earned and losses excluded, provided, however, that in case of doubt, these terms shall be interpreted in abroad sense. Any information provided by seasonax GmbH or on this website or any other kind of data media shall not be construed as any kind of guarantee, warranty or representation, in particular as set forth in a prospectus. Any user is solely responsible for the results or the trading strategy that is created, developed or applied. Indicators, trading strategies and functions provided by seasonax GmbH or on this website or any other kind of data media may contain logical or other errors leading to unexpected results, faulty trading signals and/or substantial losses. seasonax GmbH neither warrants nor guarantees the accuracy, completeness, quality, adequacy or content of the information provided by it or on this website or any other kind of data media. Any user is obligated to comply with any applicable capital market rules of the applicable jurisdiction. All published content and images on this website or any other kind of data media are protected by copyright. Any duplication, processing, distribution or any form of utilisation beyond the scope of copyright law shall require the prior written consent of the author or authors in question. Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.
