Yesterday’s inflationary data from the UK should be enough to convince the market of a 25 bp rate increase by BOE in the near term, ultimately supporting the pound.
Today’s Market Events:
GBP – BOE Inflation Report-10:30 GMT
The BOE sent its fifth consecutive letter to the Chancellor of the Exchequer on why inflation was higher than expected. BOE Governor Mervyin King will explain the position of the BOE today. Further gains should be seen in the pound as traders anticipate a tightening of UK monetary policy in response to higher than expected inflation.
Yesterday the GBP/JPY broke out higher from its 5-month range trading. Initial targets should be the August high at 137.80. Support is found at 135.00, 134.20 and 133.00.
USD – Building Permits – 13:30 GMT
Expectations: 0.57M. Previous: 0.63M.
Since November US economic data has turned a corner as the economy begins to pick up steam. Employment and housing are two areas that have lagged. As such, this data piece may be a focal point as the New York trading gets underway.
USD – FOMC Meeting Minutes – 19:00 GMT
The meeting minutes for the Fed offers insight on who approved monetary policy and who dissented while shedding light on the QE II program.
Oil – Crude Oil Inventories – 15:30 GMT
Expectations: 1.8M. Previous: 1.9M.
Yesterday’s low of $83.30 and $80.25 should serve as support levels with resistance found at $89.40 and $93.00.
