BOE inflation report expected rather soft - KBC

FXStreet (Barcelona) - KBC Strategists are expecting the BoE QIR to be quite soft today.

Key Quotes

"Yesterday, the price moves in cable and EUR/USD followed a very similar trading pattern. There was no high profile news to guide trading in the euro or sterling. Global factors prevailed. EUR/GBP hovered sideways in the 0.7820/50 range."

"Today, the UK calendar is quite interesting. First, the UK lablour market report will be published. A further decline in unemployment/rise in employment is expected. Earnings are expected a little higher (1.1% Y/Y ex bonuses), but still moderate."

"Over the previous months, good UK labour data often supported sterling, but we have the impression that the market reaction could be more moderate today, even in case of good labour data. A substantial increase in wages is probably needed to inspire further sterling gains."

"One hour after the labour data, the BoE inflation report will be published. The BOE is expected to lower inflation and growth forecasts. If so, Caney and Co can stay in a wait‐andsee modus for some time, before becoming really specific on the timing of a first rate hike. Of late, the 0.7755/0.78 area proved to be tough support for EUR/GBP. We don’t expect the BoE to provide ammunition for a break. More consolidation or even a limited upside correction might be on the car."