GBP/USD rises to a high of 1.3268 on the day
The data was more or less in line with estimates, but that was basically it. The fact that it is doing nothing to derail the BOE's rate hike plans in August is in itself good news, as mentioned before the report here.
I don't believe sterling should pull off a monster rally on the back of the release here, but basically the first piece of the puzzle this week reaffirms the notion that an August rate hike is coming and that's good enough for now.
Wage growth isn't strong or robust by any means, but it is just enough to keep rate hike expectations in check. The market is now expecting around a 76% chance of a rate hike from August, little change from before this.
So, we could see moves be capped by resistance and offers at 1.3280 to 1.3300 now that buyers took out the previous day's high @ 1.3260 earlier. But I don't see how much more can the data push sterling higher on the day itself.
Now, it's over to you Mr. Dollar. Can you hold up for the rest of the day?
