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20 Mar 2013
Forex Flash: UK Budget awaited with eyes on BoE´s remit - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts are awaiting the UK budget decision and they believe that there is some thought that the BoE´s remit may be modified.
They feel that this may give monetary officials greater leeway to offset the austerity that Osborne is expected to maintain. They note that Sterling had been under performing, but the MPC minutes showed that King and his two allies (Miles and Fisher) failed to carry a majority for the second consecutive month to resume gilt purchases. Further, they see that majority was concerned about the credibility of the BOE on new gilt purchases. Gilts sold off as many suspect that the window to resuming QE is closing as to avoid forcing Carney to inherit ongoing operations. In terms of price action, they write, “Sterling rallied a cent against the dollar to new highs on the day, just above yesterday's peak near $1.5145. Nearby resistance is seen in the $1.5160-80 area. The UK's employment data failed to impress. The jobless claims fell by 1.5k instead of the 5k the consensus expected. The unemployment rate was steady. Of note, the average weekly earnings slowed to 1.2% (January 3-monht y/y) compared with 1.5% expectation, which is well below levels that the BOE has indicated are consistent with price stability.”
They feel that this may give monetary officials greater leeway to offset the austerity that Osborne is expected to maintain. They note that Sterling had been under performing, but the MPC minutes showed that King and his two allies (Miles and Fisher) failed to carry a majority for the second consecutive month to resume gilt purchases. Further, they see that majority was concerned about the credibility of the BOE on new gilt purchases. Gilts sold off as many suspect that the window to resuming QE is closing as to avoid forcing Carney to inherit ongoing operations. In terms of price action, they write, “Sterling rallied a cent against the dollar to new highs on the day, just above yesterday's peak near $1.5145. Nearby resistance is seen in the $1.5160-80 area. The UK's employment data failed to impress. The jobless claims fell by 1.5k instead of the 5k the consensus expected. The unemployment rate was steady. Of note, the average weekly earnings slowed to 1.2% (January 3-monht y/y) compared with 1.5% expectation, which is well below levels that the BOE has indicated are consistent with price stability.”