Where for Cable after FED and BOE?

Both Anglo central banks are expected to keep tightening aggressively, at least for one more month. But the BOE is attempting to start winding down its holdings through QT.
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Fed might announce course correction

Almost nine in ten economists expect a 75bps hike in today's meeting. Last month it was reported that core inflation ticked up again to the highest in nearly four decades, even if headline CPI fell. The Fed will have to decide on policy without the benefit of the latest inflation numbers coming out next week. With the jobs market solid, the Fed has plenty of room to hike.

Things could shake up a bit with Powell's post-rate-decision press conference, in which the expectation is that he'll set the groundwork for slowing down the pace of hikes. For the next meeting in mid-December, there is an almost even split in expectations between 50bps and
75bps. That means analysts haven't made up their minds, so comments from Powell that could incline in either direction are more likely to affect markets.

BOE in slightly calmer waters

The consensus for the BOE to raise rates by another 75bps is a little shaker than it is for the Fed. There is a little more hedging about how far the BOE will go after it said that a recession was on the way. This week, and before the meeting, the bank started its expected QT just a couple of weeks after its emergency easing program in the wake of the mini-budget situation.

The UK is facing much tighter liquidity conditions, which opens some speculation about whether the BOE will follow through to the expected 5.0% rate by next year. The other issue could be the vote split; if the 75bps option wins by a small margin, it could have a more dovish effect on the markets.

Cable resumes trend

GBP/USD rose outside its consolidation phase as it completed a rising pennant, resuming the upward trend. Applying the Fibonacci retracement tool to the pattern's height (H) exposes the inverse 38.2% and 61.8% retracements at 1.1935 (R2) and 1.2210 (R3). However, a break above the swing high of 1.1740 (R1) must ensue if the short-term resistances at 1.1565 and 1.1650 break.

If prices slide below the breakout point of 1.1410 in the short term, 1.1060 (S2) will be back in focus once the 1.1255 (S1) low succumbs to pressure. Losing the 38.2% Fibonacci retracement, which is very near the said support, will clear the path towards the pennant low of
1.0920, which is in the vicinity of the 50% Fibonacci retracement.

Key takeaways

Almost nine in ten economists expect a 75bps hike, and possibly slowing down the pace in the future. On the other hand, the BOE is also expected to raise rates by 75bps.But there is some speculation about whether they will follow through to the expected 5.0% rate by next year as a recession is on the way. If the MPC members vote for 75bps, even by a small margin, it could have a more dovish effect on the markets.