What to expect from BoE today?

4 August, 2016

The Bank of England meets today for the second time post Brexit vote, and after failing to deliver in its July meeting, expectations are too high for some sort of easing measures to prevent the economy from falling into a prolonged recession. The central bank will also release its forecast for growth and inflation in its August inflation report which will be interesting to see if policy makers expect the economy to fall into a technical recession.

Although GDP and employment figures releases last month showed some strength, the central bank will look beyond them as they’re only lagging indicators. In fact, PMI data for July showed significant deterioration in sentiments within all economic sectors. This probably isn’t enough to completely assess the short term-impact on the economy, but would certainly spur the BoE to take action.

Since policymakers met in July14, Sterling has been moving in a range of 1.3055 – 1.3480, and it would require a big surprise to see a breakout from current range. Markets have already priced in a 25 basis point rate cut, and I do not expect any steeper move in this meeting. Markets will be closely watching Mark Carney’s comments on how low interest rates can go and whether negative rates are an option.

The BoE might also extend its funding for lending program which was originally launched in July 2012 to continue encouraging banks to lend to the economy, but the big question is whether the central bank will restart their asset purchase program currently at £375 billion. If they decided to expand QE another question will arise, which is how much will be allocated to cooperate bonds as impact on gilts likely to be negligible at current low yields.

I will be surprised if the BoE sits on its hands today and does nothing, at least a 25 basis points rate cut for now, and any action beyond that will likely take Sterling below 1.30 against the U.S. dollar.


Source link  
Equity investors doubting trade truce

The relief rally led by the US-China trade war truce didn't last long. Investors in Asia were seen taking profits from Monday's bounce in equities...

Global markets surge on trade truce hopes

Optimism over the temporary trade truce announced between the United States and China after the G-20 summit in Argentina last weekend has played...

Fed commitment supports Greenback

Reinforced expectations over higher interest rates in the United States after the Federal Reserve provided a consistent narrative that policymakers...


Rupiah manages to withstand Dollar drive

Improved risk appetite and an improved attitude towards global stock markets have helped support a number of different APAC EM currencies...

Equity sell-off resumes in Asia

The steep sell-off in U.S. equity markets suggests October could be the worst month since the global financial crisis of 2008. Seven trillion...

Sea of red across global equity markets

October has been a terrible month for equity investors so far. The S&P 500 and Dow Jones Industrial Average fell into negative territory for the year...


Italian budget, ECB meeting, US GDP

Asian shares were mostly higher this morning as Chinese indexes rallied more than 4% on verbal support from the country's top officials. Although the positive...

Yuan approaches critical level

The trading week kicked off with a panicked sell-off in Chinese equities which simply expresses growing fears in financial markets. Rising U.S...

Gold shines on Italy turmoil

Gold is poised to remain in the limelight this week after aggressively appreciating roughly $18 in a three-hour window. The yellow metal surprised markets...


In the past 24 hours Bitcoin has gained 1.6% and reached $3555.8583147. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has lost -0.4129% and is now at $1.1327. Start trading and making money on Forex today.

In the past 7 days Ethereum has lost -18.52% and is now at $92.6014100273. Have the most popular cryptocurrencies compared online 24/7.


Top Brokers offering Daily Forex Market Reviews


Forex Currencies Forecasts


Top 10 Forex Brokers 2018

# Broker Review
1easyMarketseasyMarkets92%
2FXTMFXTM88%
3HYCMHYCM87%
4Alfa-ForexAlfa-Forex86%
5FxProFxPro85%
6FIBO GroupFIBO Group84%
7OctaFXOctaFX83%
8HotForexHotForex82%
9AvaTradeAvaTrade80%
10FXCMFXCM78%
  


Share: