GBP Rallying Hard On Hawkish BOE CommentsGBP is on the move north this week amidst hawkish comments from key BOE members. Yesterday, BOE’s Mann said that the BOE’s failure to match the Fed’s aggression in terms of tightening had left the country vulnerable to further increases in inflation. Mann called on the need for greater action from the central bank. Today, we heard from BOE’s Pill, the chief economist at the central bank, who said that he foresaw further monetary tightening as necessary over the remainder of the year in order to tame inflation.With the BOJ still firmly committed to maintaining an easing presence in the market, the monetary policy divergence between the BOJ and BOE leaves GBPJPY vulnerable to further upside. Bulls can look for a break of the current 168.39 targeting a breakout beyond the bull channel top with 175.01 the longer-term objective. With the retail market more than 70% short, there is plenty of room for a fuller upside break here.Keep An Eye OnUK CPI this week will be a major focal point now for traders. With an increase in the annual rate expected (9% to 9.1%), there are upside risks for GBP. Earlier this week I noted that a stronger inflation reading might impact GBP negatively. However, in light of these hawkish comments this view has now changed with an upside inflation beat expected to reinforce hawkish BOE expectations into the August meeting, driving GBP higher.
Source: Tickmill
