Top Story

EUR/GBP: BoE’s Haldane turns hawkish, sends pound soaring

Forget the Queen’s Speech, it was all about Andy Haldane this morning. The pound jumped and the FTSE dropped after the Bank of England’s chief economist and Monetary Policy Committee member said he’s ready to vote for an increase in interest rates "relatively soon". This came as a major surprise because Mr Haldane has long been a known dove. He is going head-to-head against the Governor Mark Carney, who is fast losing support on his dovish stance.  He said that “a partial withdrawal of the additional policy insurance the MPC put in place last year would be prudent relatively soon.”

Mr Haldane said that the risk was that the Bank tightened its belt too late rather than too early. This is something which the Bank of Canada is also worried about and what the US Federal Reserve had long been wary of, and the European Central Bank better be ready for. The latter came across pretty dovish at its last meeting. With the BoE turning hawkish and ECB remaining dovish, the EUR/GBP could come under pressure in the coming days and weeks.

The EUR/GBP has actually respected its long-term resistance in the 0.8860-85 range, an area which was formerly support. But so far we haven’t seen a breakdown in market structure. Once a key support area such as 0.8720-40 breaks, then we may see a more decisive move southbound. Until that happens, one has to be wary of the possibility for a rebound, because of the higher highs and higher lows. My bearish outlook would become invalidated upon a potential break above that 0.8860-85 resistance range. 

Source: eSignal and FOREX.com.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.