GBP prepares for the "Super Thursday"
Current week is rather intense for the UK currency. At the beginning of the new week, we’re seeing a range of PMIs. Manufacturing PMI on Monday improved to 55.5, supporting the pound. Don’t miss the Construction PMI on Tuesday and the Services PMI on Wednesday. We do not expect heavily negative surprises from this side.
November 5 is another “Super Thursday” in the UK. Bank of England will announce its interest rate decision, release meeting minutes and quarterly inflation report. We expect no changes in interest rates. However, a shift in voting pattern is possible. One or two members could join Ian McCafferty in supporting an “immediate rate rise”. This would become a bullish factor for the cable.
As for the inflation report, it is expected to show a decline in the near-term inflation expectations and tiny downbeat revisions to the near-term growth forecasts. However, in a longer-term prospect economic conditions are expected to remain stable, so we don’t expect the selling pressure on the cable to stay heavy for a prolonged time.
As for the external economic developments, don’t miss the US NFP release on Friday, November 6.
Technical picture: GBP/USD is now trading in a medium-term bullish flag (red lines on the daily chart). We expect the current bullish move to be capped by 1.5500. Given the fact, that the Fed is expected to hike earlier than the BOE, we concede the pair could reverse back to 1.5000 in the coming weeks. However, in a longer term the pair has reach bullish potential.