- Posted by currencies in Bank of England, Brexit, Currency, Dollar, Economy, EUR, GBP, Sterling, UK, Uncategorised
- August 7, 2017
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The big news from the past week for the British Pound was the Bank of England’s rate decision on Thursday. This was a quarterly meeting, often referred to as ‘Super Thursday’ as the BoE accompanied the rate decision with a set of updated forecasts as well as meeting minutes and a press conference after the decision. It was probably no surprise to many that BoE Governor Mark Carney remained dovish, as has become usual in the post-Brexit backdrop.
But Thursday’s meeting wasn’t so cut and dry: While Mr. Carney did remain dovish and rather pessimistic for the economy’s prospects around Brexit, the BoE did indicate that rate hikes may be on the horizon. Within the meeting minutes, the BoE said If the economy were to follow a path broadly consistent with the August central projection, then monetary policy could need to be tightened by a somewhat greater extent over the forecast period than the path implied by the yield curve underlying August projections.
For the week ahead, the calendar is rather light on U.K. economic data. The highlight will likely be on Thursday, when we receive a batch of data points that could bring some volatility into GBP. Industrial and manufacturing production numbers are released earlier in the day, followed by NIESR GDP estimates for the month of July a bit later. Given that growth forecasts were recently downgraded, any topline beats here could bring on a quick iteration of strength to the British Pound.
The forecast for GBP for this week will be held at neutral. Until more information avails itself on the inflationary front, it can be difficult to see any extended runs of strength in GBP.