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7 Mar 2013
Forex Flash: FT reports Osbourne will hand BoE new powers - Societe Generale
Kit Juckes, Global Head of Currency Strategy at Societe Generale has highlighted a report in today´s FT which reports that Chancellor George Osborne is preparing to hand incoming BOE Governor more powers, as a response to his own lack of fiscal room for manoeuvre.
Further, he sees that the FX market has sold sterling on this story and now goes into the MPC meeting short. He writes, “Consensus expectations are that rates will be left at 0.5% and the BOE asset purchase target left at GBP 375bn but there is plenty of talk of a further GBP 25bn increase in the latter. Some movement is probably priced in and an ‘as expected’ no change in either could see short-covering. We look for GBP/USD to head to 1.40 over time, but tight stops seem wise at noon.”
Further, he sees that the FX market has sold sterling on this story and now goes into the MPC meeting short. He writes, “Consensus expectations are that rates will be left at 0.5% and the BOE asset purchase target left at GBP 375bn but there is plenty of talk of a further GBP 25bn increase in the latter. Some movement is probably priced in and an ‘as expected’ no change in either could see short-covering. We look for GBP/USD to head to 1.40 over time, but tight stops seem wise at noon.”