Pound rises as mixed data boosts BOE rate hike case

Bloomberg

The pound rose as UK data was seen supporting the case for a November rate increase from the Bank of England (BOE).
Sterling’s rally took this week’s gains to around 1 percent, as manufacturing and construction output beat forecasts. The data still showed a mixed picture for the U.K. economy as the nation’s trade deficit increased to the most in almost a year on higher imports.
“Some will sense the recent data will push the Bank of England (BOE) to hike, especially given the recent Office for National Statistics miscalculation,” said Neil Jones, London-based head of hedge fund sales at Mizuho Bank Ltd. “But there should still be upside limits given the longer term bigger picture of the Brexit deal still at ground zero.”
The pound rose 0.3 percent to $1.3179 in London, after a session high of $1.3198. It was little changed at 89.35 pence per euro. Benchmark U.K. 10-year bond yields were little changed at 1.37 percent.
Sterling was boosted on Monday as the ONS corrected upward previously released labor data. The revised figures suggested the BOE may have to tighten policy at a faster pace than the market had forecast, with MPC-dated SONIA now pricing in a second rate hike by September 2018.
The pound was unmoved by U.K. Prime Minister Theresa May planning for a no-deal Brexit. May won backing from Brexit supporters in her cabinet after outlining on Monday contingency plans for leaving the European Union without a deal, bringing hardliners onside as Britain goes another round of talks.