GBP/USD recap for 07.10.2015 and BOE meeting
M&A talk and UK data helped the pound get trough 1.5300 yesterday.
The AB Inbev takeover SAB Miller has been in the news again as details of a raised bid came out earlier in the day. Tat bid of 42.15 was raised after a bid of 42.00 was rejected on Monday. That's largely the reason for the bid in it on Wednesday. The second kick higher has come from the industrial production number coming out strongly. If the latest AB offer gets rejected swiftly then that might take a lot of the wind out of the sails of this rally.
FX commentary from Credit Agricole ahead of the BOE decision on Thursday:
"With rates markets now pricing in a lift-off around August 2016, chances are that the upcoming UK data release and BoE rhetoric could encourage investors to front load rate hike expectations.
On Thursday's BoE meeting and policy minutes could signal that a growing number of MPC members have considered voting for a rate hike, consistent with recent more hawkish comments by Forbes and Weale.
In addition, the fact that the UK CA deficit dropped sharply in Q2 while GBP TWI continued to lose ground hitting a fourmonth low recently. This could help ease some of the concerns at the MPC about the impact from FX appreciation.
We stay in favor of buying GBP dips."
So buy the dips... Later today all will be clear. Price's rally stopped at 1.53688 and if all goes well for the Pound, the price can jump to 1.54798 in the short-term, 1.55232 and to 1.56872 in the long-term. If not - 1.51344 will be tested again and probably the price will go like knife trough butter and in the long-term a drop to 1.50 and 1.49250. It is simple: Buy on signals about a rate hike, sell on the opposite.