Pound holds its floor as BoE member Greene presses for a hike

Bank of England (BoE) external member Greene said in Cape Town that it's dangerous to assume markets will do the BoE's work for it, and that UK pay awards look set for about 3.5% next year. She has voted for a hike at each of the last three meetings. Governor Bailey has argued that higher borrowing costs since the US-Iran war began have given the BoE time to decide, which is the argument she called dangerous.

Traders price about an 83% chance that the UK's Bank Rate rises to 4.00% from 3.75% on November 5, against roughly one in five for a Fed hike on October 28. A BoE move first would put the Bank Rate level with the top of the Fed's 3.75%-4.00% range and erase the extra interest a Dollar deposit earns over a Pound one.

GBP/USD dipped just under 1.3200 before Governor Bailey's speech in Istanbul, a few pips short of the three-month low set on October 1. It turned up after the speech and reached just under 1.3250 as the Dollar slipped from near its 18-month high, then closed in the upper third of the day's range.

Every daily low since September 24 has come within about 30 pips of 1.3200, and every high in that run has stopped below 1.3300 apart from a brief spike above it on September 30. The pair has traded under its 50-day and 200-day Exponential Moving Averages (EMAs), trend lines built from past closing prices, since mid-September.

The BoE has seven speeches scheduled between October 12 and October 16, ending with Governor Bailey, and each will test the 83% priced for November. Before them, Friday's University of Michigan (UoM) survey carries US households' one-year inflation expectations, 4.6% in September, and a higher reading could lift the odds of an October Fed hike.

US Consumer Price Index (CPI) data follows on Wednesday, October 14, and UK Gross Domestic Product (GDP) for August on Thursday, October 15.

A firm US inflation number could put the three-month low back in reach, while a soft one may leave November's BoE hike as the only move priced with much confidence before December.

GBP/USD daily chart