BoE Hints at Balanced Debate for Next Meeting as Weakness Looms
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- BoE hints at balanced debate at the next meeting
- Employment survey points to further weakness
- GBPUSD nearing major support zone
A big couple of weeks are in store for the Bank of England and figures today may support the case for a more balanced debate on 21st September, as policymakers hinted this week.
Inflation is by no means under control but it is falling fast and, if the BoE is to be believed, it is expected to fall markedly over the remainder of the year. If the MPC is going to be confident of inflation returning sustainably to 2%, the labor market will likely be key to it so there’ll likely be a much greater focus on it going forward.
We’re already seeing some progress on this front but much more is likely needed. Today’s survey from KPMG and REC suggests more weakness is on the horizon. Permanent placements, availability, and salaries are all promising from a BoE perspective and may contribute to some lively debate in a couple of weeks.
Of course, surveys alone won’t be enough to convince them. The UK jobs report next week could offer another helping hand and put the decision on the 21st much more in the balance. Markets are currently convinced that another hike is coming but that may change if unemployment ticks higher again and wages soften.
GBPUSD continues to slide toward key SMA band
The pound has continued to fall this week, aided by the comments from the BoE and perhaps today’s survey.
GBPUSD Daily
Source – OANDA on Trading View
After breaking below the August lows earlier this week, shortly after running into resistance from the 55/89-day simple moving average band, the pair is continuing to edge closer to the 200/233-day SMA band.
This falls around 1.23-1.24 and also coincides with the lows from the second quarter of this year. A break below here could be a very bearish development, especially if aided by a weaker UK jobs report or stronger US inflation release.
