Bank of England: No surprises, recognizes Q3 growth may be higher - Danske Bank

Matías Salord FXStreet

Analysts at Danske Bank, point out that the Bank of England did not make any big policy signal after today’s announcements. They see the next rate hike in May 2019.

Key Quotes:

“As expected, the Bank of England (BoE) voted unanimously to keep the Bank Rate at 0.75%. As it was one of the small meetings without an updated Inflation Report or press conference and following last month’s hike, this did not come as a surprise”.

“The BoE did not make any big policy signal shifts either, although it recognises Q3 growth may be higher than previously anticipated after the stronger-than-expected GDP growth print in July.”

“We still expect the BoE to hike around once a year and our base case is that the next hike will arrive in May 2019; therefore, after the UK formally leaves the EU. It may be earlier if the economy continues to surprise on the upside. On the other hand, the central bank also stated that Brexit uncertainty has gone up among businesses and in particular investors since the August meeting. The rate decision also depends on the outcome of the Brexit negotiations, as we are approaching the ‘end game’ in Q4.”

“It was announced earlier this week that BoE Governor Mark Carney has extended his term to January 2020 ‘to support a smooth exit of the United Kingdom from the European Union’. This should not have any policy implications in the short run.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

AUD/USD extends the range play above 0.7200 as traders await US inflation data

AUD/USD is seen extending its consolidative price move above 0.7200 during the Asian session on Thursday amid mixed cues. Rising RBA rate-hike bets keep the Aussie close to its highest level since May 14. However, hawkish Fed expectations and escalating US-Iran tensions offer some support to the US Dollar, capping the currency pair as traders await US inflation figures.

USD/JPY consolidates around 153.50 as bears turn cautious ahead of US inflation

USD/JPY stabilizes above 153.50 during the Asian session on Thursday, but remains near a seven-month low set earlier this week as hawkish BoJ repricing continues to underpin the Japanese Yen. Meanwhile, rising September Fed rate-hike bets and escalating US-Iran tensions help ease US Dollar selling pressure, offering some support to the currency pair ahead of US inflation figures.

Gold regains balance above $4,400

Gold rebounds on Wednesday, snapping a three-day losing streak and reclaiming the are beyond the key $4,400 mark per troy ounce. The precious metal’s bounce comes amid further selling pressure on the US Dollar and steady uncertainty on the geopolitical front.

Bitcoin outperforms global assets as $83K-$86K resistance zone continues to weigh on rally

Bitcoin (BTC) has continued to recover from its mid-year weakness, outperforming major traditional assets over the past month, amid strong resistance around the $83,000 to $86,000 range. BTC gained 23% over the past 21 trading sessions, while the S&P 500 and Nasdaq 100 were broadly flat and the Euro Stoxx 50 declined, according to a Glassnode report published Wednesday.

Private credit books a Fed hike as income until borrowers stop paying

Seven of the largest publicly traded business development companies (BDCs) state in their June quarter filings what a rise in the base rate is worth to them. Across the seven, 100 basis points adds $677.1 million of annualised interest and dividend income and $367.2 million of net income.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.