We look for a BoE rate cut despite bounce in PMIs – TD Securities

Previewing next week's Bank of England (BoE) monetary policy meeting, "we look for a rate cut, despite the bounce in the PMIs," said TD Securities analysts.

Key quotes

"Looking at the BoE's normal, historical reaction function, by our calculations the BoE normally would have been holding an easing bias for at least the last year. And most of this weakness was coming from the survey data, while the hard data had been holding up a bit better than the PMIs and other surveys would suggest, giving the BoE cover to keep rates on hold."

"However, the most recent source of weakness in the UK has been the hard data, which turned notably softer into the end of 2019, while we've most recently seen a rebound in the survey data. The question is whether the BoE can now credibly turn around and say that the hard data should be looked through, while the survey data must be the true reflection of economic momentum."

"For the last year we've seen weak survey data, but the hard data strong enough to keep the BoE on hold. With that pattern having flipped, and hard data weakening but surveys pointing to optimism, the BoE cannot credibly say that now the survey data is sending the correct signal. The call is very close though, near 50-50."

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.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD rebounds after dismal US PMIs

EUR/USD is trading closer to 1.0850, rising in response to weak US PMIs, with the services one pointing to contraction. Earlier, German Manufacturing PMI beat estimates. 


GBP/USD advances to 1.2950 after US data

GBP/USD is trading around 1.2950, taking advantage of US weakness stemming from a downfall in Markit's Services PMI in the US. In Britain, the Manufacturing PMI exceeded estimates. 


Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Consolidation process underway

The Crypto board continues to be immersed in an emotional leg-breaking, consistently punishing the emotional state of the traders with its continuous changes of direction.

Read more

XAU/USD unstoppable, breaks to fresh 2020 highs, approaching $1650/oz

XAU/USD is trading in an uptrend above its main daily simple moving averages (SMAs) while breaking above a bull channel. Gold is printing fresh 2020 highs hitting $1646.64 per ounce on an intraday basis.  

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info