Cable climbs back above 1.3100 to a session high of 1.3120
When I look at the pound now, all I can think of is positioning adjustment ahead of the BOE and year-end trading. Given all the price movements that have played out since the end of last week, it's hard to see any real trend in the currency for the time being.
Sellers are still in near-term control as price keeps under both key hourly moving averages and yesterday's price action was telling about how traders are playing things out before the holiday period kicks in next week.
Price action is largely pivoting around the 1.3100 handle with sellers not able to drive price below 1.3050 to test the 1.3000 handle. Meanwhile, buyers are also left stranded amid the lack of encouragement after Boris Johnson reignited no-deal Brexit jitters earlier this week.
Looking ahead today, it's all about the BOE policy decision. No rate cut is expected but it'll be interesting to watch the votes - expected to be 7-2 once again - and the language that the BOE will frame the UK economic outlook going into next year.
A more dovish take to lay out expectations of a possible rate cut may weigh on the pound - especially with inflation data this week providing a reason for that.
However, with Johnson winning an overwhelming majority in the election, it feeds into the BOE base case of a smooth Brexit scenario. Although, his threat of a no-deal Brexit by the end of next year does warrant some consideration in my view.
So, let's see how they mix things up later today. Otherwise, I would expect the pound to continue to stay choppy around 1.3060 to 1.3130 with a potential move towards hugging a similar choppy range around 1.3200 if it breaks 1.3150.
