FXstreet.com (Barcelona) - TD Securities and 25% of analysts were calling for a further QE extension, but the BoE left everything unchanged, in line with consensus. No change in policy means no statement and markets will have to wait until the next Inflation Report on 14 November to get more insight into the BoE’s thinking, and the minutes on 21 November to find out just how close the vote was.

“In the Inflation Report and Governor King’s press conference next week, we’ll probably see some focus on the strength in the labour market, as well as the effectiveness of QE, and whether lower bond yields are really the answer to the economy’s current problems”, wrote analyst Jacqui Douglas, expecting comments about the FLS and eventual other similar measures which attempt to target the credit problem more directly than does a blunt tool like QE.

“We said that we foresee gilt yields moving higher over the next three months in any scenario, so today’s no-QE decision just implies that yield are likely to do so at a faster pace, once US fiscal cliff issues are resolved”, Douglas added, ponting to more responsive gilts and GBP to economic data now than if the BoE had extended QE, “since more QE would have put us on autopilot for the next three months”. “Instead, policy will now be contingent on the data, since we saw an episode earlier this year where the BoE left QE unchanged in May, but worse economic data pushed them into re-launching QE in July, so markets will be watching closely to see if that could be the case again”, said the TD Securities analyst, seeing scope for more GBP/USD gains past Draghi's conference.