BoE Review: No fireworks offered - TDS

Analysts at TD Securities point out that the BoE’s MPC unanimously left the Bank Rate on hold and the small downward revisions to the near-term growth outlook were partly offset by increased fiscal stimulus from November's budget, while it pointed to continued domestic price pressures.

Key Quotes

“Brexit is clearly becoming an increasing concern to the MPC, as evidenced by its frequent appearance in the Summary. We sense that the MPC is becoming less certain about the "smooth transition" assumption underlying its forecasts. Indeed, the probability that Article 50 needs to be extended by a few months is increasing materially, in our view.”

“FX: Today's MPC decision does not provide GBP with a notable directional cue as Brexit and domestic politics remain the main drivers. As the pace of these developments slows, we expect cable to grind higher in line with our expectation for a broadly weaker USD post-FOMC. We continue to see some upside potential for EURGBP, however, as political concerns will not disappear entirely into January.”