In view of Jane Foley, Senior FX Strategist at Rabobank, the messages from the Bank of England in December did not stray far from that provided in November. 

Key Quotes 

“Having hiked rates last month, the MPC voted unanimously to keep policy on hold and repeated the message that it was in no rush to move again.  The Bank reported that “domestically, some activity indicators suggest GDP growth in Q4 might be slightly softer than in Q3”.  This cautious statement was most likely written ahead of the release of stronger than expected UK November retail sales data.  That said, the MPC made clear that further rate hikes were on the radar and that “further modest increases in Bank Rate would be warranted over the next few years”.”

“Just ahead of the December policy meeting, the stronger than expected print for UK November CPI inflation at 3.1% y/y had provided some support for the pound. The headline rate should start to edge lower in the coming months as the impact of last year’s GBP drop falls out of the year-on-year calculations.  However, the impact of domestically generated inflation is expected to keep CPI inflation supported and potentially above the Bank’s 2.0% target through the forecast period.  If CPI inflation remains sticky through H1, it is feasible that the MPC will bring forward the next rate hike.  That said, we don’t see the next move as coming before the end of 2018.  In the first part of next year, it is likely to be politics rather than monetary policy that will provide the most incentive for the pound.” 

Share: Feed news

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD holds above 1.0800 after German and EU PMI data

EUR/USD holds above 1.0800 after German and EU PMI data

EUR/USD holds above 1.0800 in the European session on Thursday. The data from Germany and the EU showed that the business activity in private sector expanded at an accelerating pace in May, helping the Euro find demand. US PMI reports will be published later.

EUR/USD News

GBP/USD clings to small gains above 1.2700

GBP/USD clings to small gains above 1.2700

GBP/USD is clinging to recovery gains above 1.2700 in European trading on Thursday. The PMI data from the UK showed that Composite PMI edged lower to 52.8 in May (preliminary) from 54.1 in April, limiting Pound Sterling's gains ahead of key data releases from the US.

GBP/USD News

Gold price extends the downside on Fed's hawkish stance

Gold price extends the downside on Fed's hawkish stance

Gold price trades with a negative bias on Thursday. The hawkish stance of the FOMC minutes from last month's meeting might cap the precious metal’s upside. Investors will focus on the first reading of US PMI data for May, due on Thursday.  

Gold News

As Ethereum spot ETF approval nears, these altcoins could explode

As Ethereum spot ETF approval nears, these altcoins could explode

It is not surprising that altcoins related to Bitcoin saw a major rally post-Bitcoin spot ETF approval. Likewise, tokens closely related to Ether could ride the ETF approval wave. Ethereum Classic, Pepe, Floki and other DeFi tokens could gain momentum as the ETH ETF approval deadline nears. 

Read more

US S&P Global PMIs Preview: Economic expansion set to persist in May

US S&P Global PMIs Preview: Economic expansion set to persist in May

On Thursday, S&P Global will issue its flash estimates of the United States (US) Purchasing Managers Indexes (PMIs), a monthly survey of business activity. The survey is separated into services and manufacturing output and aggregated into a single statistic, the Composite PMI.

Read more

Forex MAJORS

Cryptocurrencies

Signatures