Pound Recovery Mixed as BOE Hike Bets Rise
The British pound is showing a mixed recovery as expectations for a Bank of England (BOE) rate hike in November rise. While the pound faces pressure from a stronger US dollar and Japanese yen, it is gaining against weaker currencies like the euro, Swiss franc, and New Zealand dollar. The pound also shows potential for gains against the Canadian and Australian dollars.
Recent economic data and BOE communications have boosted hawkish bets. September PMI data indicated the sharpest rise in output prices since May, and several MPC members have warned of persistent inflation pressures. Markets are now pricing in roughly a 64% chance of a 25 basis point hike in November, with the 3-month OIS rate rising to 3.91%.
Technically, the pound's recovery is uneven. GBP/USD has fallen 3.2% from its August high but remains above key swing lows. EUR/GBP has rolled over, aligning with a bearish bias targeting 0.8437. GBP/JPY is choppy and susceptible to two-way trade, while GBP/CHF is in an uptrend but facing volatility.
GBP/CAD shows an established uptrend on the weekly chart, with potential upside targets at the monthly S1 (1.8966), 1.9000 handle, and 1.9043 high. GBP/AUD is retracing lower, but bullish reversal signs suggest a focus on moving towards the June high.