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GBP gains on hot inflation expectations – BBH

Pound Sterling (GBP) is firmer against USD and steady versus EUR after the BoE’s September survey revealed a surprise uptick in inflation expectations. With 1-year expectations rising to 3.5% and 3-year to 3.1%, the highest in nearly a year, policymakers face a difficult balancing act between inflation risks and weak growth, BBH FX analysts report.

BoE survey shows 1Y outlook at 3.5%

"GBP is up versus USD and range-bound against EUR. The Bank of England’s (BOE) September DMP inflation expectation survey ran hot. 1-year inflation expectations unexpectedly rose 0.1pts to 3.5% (consensus: 3.4%), the highest since December 2023. 3-year inflation expectations also increased 0.1pts to 3.1%, the highest since November 2023."

"Bottom line: elevated UK inflation expectations and a sluggish growth outlook complicates the BOE’s task and supports the uptrend in EUR/GBP."

USD/JPY: Sharp declines appear excessive – UOB Group

US Dollar (USD) is likely to trade in a range between 146.70 and 148.00. In the longer run, sharp declines appear excessive, but USD could drop to 146.30. The odds for a continued decline below this level are not high, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
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USD/CNH is expected to consolidate between 7.1200 and 7.1380 – UOB Group

US Dollar (USD) is expected to consolidate between 7.1200 and 7.1380. In the longer run, for the time being, USD is likely to trade in a range between 7.1000 and 7.1480, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
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