All eyes on BoE meeting this afternoon
- Posted by currencies in Bank of England, Bremain, Brexit, Currency, Dollar, Economy, EUR, GBP, Inflation, Mark Carney, Prime Minister, Sterling, UK, Uncategorised
- May 11, 2017
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Sterling remained below seven-month highs against the dollar this morning, as investors waited for UK economic data and a Bank of England interest rate decision and inflation report due later in the day, neither of which is expected to indicate a change in bank policy.
A quieting of global market volatility and developments on its talks on leaving the European Union have helped the pound since it gained 3 percent gain on Prime Minister Theresa May’s announcement of a June 8 parliamentary election last month.
Sterling has also struggled to climb past $1.30, and there was little confidence among dealers of a signal from the Bank of England on Thursday that would send it higher, even as inflation tops the bank’s 2 percent target.
The BoE is expected to leave record-low interest rates unchanged. Brexit, a national election and mixed economic data are likely to leave the Bank seeking more clarity before it raises rates for the first time in nearly a decade.
Despite 1Q2017 GDP growth disappointing the BoE’s forecasts, the focus today will be on whether anyone joins Kristin Forbes in voting for a hike.
After Charlotte Hogg’s resignation, there are only 8 members on the MPC (Monetary Policy Committee) now, meaning we are likely to see a 7-1 vote for unchanged policy. A 6-2 vote, with perhaps Michael Saunders voting for a hike, would be a surprise and would lift sterling.
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