GBP/USD braces for Fed, BoE action in December
Oct 30 (Reuters) - Cable is likely to be kept on its toes by the scope for fluidity in Bank of England and Federal Reserve interest rate expectations - apart from anticipated rate cuts from both central banks next week, two days after the U.S. presidential election.
Twenty six out of 72 economists expect the BoE to reduce rates by another 25 basis points on Dec. 19, beyond the quarter-point cut forecast by all 72 for Nov. 7, according to a Reuters poll published on Monday.
A Reuters poll published on Tuesday showed 103 out of 111 economists expect the Fed to cut rates by 25 bps on Dec. 18, further to the quarter-point reduction predicted by all 111 for Nov. 7.
GBP/USD might weaken if the BoE delivers a dovish cut next week, as this would increase the chance of another before Christmas. Any such weakness could snowball if the Fed opts for a relatively hawkish cut seven hours after the BoE on Nov. 7, as this would raise the risk of a Fed hold in December.
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(Robert Howard is a Reuters market analyst. The views expressed are his own)
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