BoE: Three scenarios and the implications for GBP/USD – TDS
|Economists at TD Securities discuss the Bank of England interest rate decision and its implications for the GBP/USD pair.
Hawkish (15%): No Change to Guidance
“The expected doves dissent, while Mann votes for 75 bps. Forward guidance remains unchanged and the MPC drops the reference to market pricing being too high. GBP/USD +0.25%.”
Base Case (60%): Slight Tweaks to Guidance
“Language softens on the margin to reflect the downshift to a 50 bps hike, but nothing in the Summary suggests the next meeting will see a further slowdown in the pace of hikes, with 50 bps still on the table for February. A tight labour market is still the focus, despite soft growth numbers. The MPC retains the clause about market pricing being too aggressive. GBP/USD -0.15%.”
Dovish (25%): More Dovish Dissents
“More than two MPC members vote for 0 or 25bps hikes, signalling that the MPC is ready to downshift its pace of hikes further. This would suggest a terminal rate of at most 4%, with hikes ending by March. GBP/USD -1.00%.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.