All the focus is on the Bank of England (BoE) meeting on Thursday, August 5. As the Bank is unlikely to turn more hawkish, economists at ING expect a marginal upside potential for the sterling coming from the “Old Lady”.
Not much surprise expected from the BoE
“We don’t expect any new guidance on the interest rate path and look for the repeat of prior language that ‘significant progress’ is needed before stimulus is removed. Only 1-2 members are likely to vote for an early end of the QE.”
“As this should not come as a surprise to markets and the guidance should be seen as neutral, the impact on GBP should be rather limited.”
“With EUR/USD stabilising and the dollar experiencing some tentative progress, GBP/USD is likely to test the 1.4000 level. However, given that we see an upside to EUR/USD as limited and the UK specific news should not provide too much boost to sterling, we don’t look for a material spike in GBP/USD above the 1.400 level – rather a shallow one, if any.”
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