Subtle signs for sterling

Sterling was sagging in early European trade as we head into today’s MPC meeting. This is really about gauging subtle shifts in MPC thinking since August, when policy was eased and a decent indication was given that it may have to be eased again later this year. On the face of it, the data has not been shifting this way, so the potential for sterling volatility is largely going to come from any change in this perception as revealed in the minutes to the meeting. Initial cable resistance comes in at 1.3164.

Talking of central banks, the SNB today kept key policy rates unchanged at their quarterly meeting, with the target for Libor remaining at -0.25%. There was no reason for the Swiss franc to get excited and it was no surprise to see the SNB re-iterating that the franc remains significantly overvalued.

Elsewhere, the latest labour market data in Australia saw a small fall in the unemployment rate to 5.6%. The Aussie was little changed, with the dollar-bloc (CAD and NZD) generally softer as we head into the FOMC meeting next week.

Did you know?

The GBP/USD pair is widely referred to as “cable”. The term dates back to the 19th century, during which the exchange rate between the U.S. dollar and the British Pound was transmitted across the Atlantic via a huge cable that ran across the ocean floor and connected the two countries.

Word of the day
"Abandoned Baby" - A formation on a candlestick chart indicating reversal.
Pro Tip

pip value in quote currency = pip in decimal places X trade size