BOE monetary policy decision - Overview
It’s a ‘Super Thursday’ again and time for the Bank of England’s (BOE) second rate hike announcement since the global financial crisis (GFC), which will be announced at 1100GMT, accompanied by the release of Quarterly Inflation Report (QIR) and the minutes of the policy meeting.
The BOE is widely expected to raise the benchmark bank rate by 25 bps to 0.75% from 0.50% previous, with a 7-2 voting composition in favor of a rate hike. Recall that at the June BOE MPC meeting, the central bank’s Chief Economist Andy Haldane joined the arch hawks Ian McCafferty and Michael Saunders. Hence, today, we could see a shift to the hawkish camp either by Governor Carney or Deputy Governor Broadbent for the 7-2 vote pattern.
However, the rate hike is likely to turn out to be a ‘dovish rate hike’, as this could be the final rate hike for this year, with the central bank seen downplaying the talks of rate hikes in the coming months. A lack of progress on the Brexit talks and the rising odds of a ‘Hard Brexit’ is expected to be the main reasons for the BOE to pour cold water on the rate hike outlook.
Also, not to forget the recent series of downbeat UK economic releases and escalating US-China trade tensions could keep the BOE on hold in the near future. Focus also remains on the QIR and Carney’s post-policy press conference.
“The Inflation Report is unlikely to show any noticeable changes in GDP and CPI forecasts from the previous updates. Therefore any significant changes could move the pound in the direction of the surprise, everything else being equal,” according to Fawad Razaqzada, Technical Analyst at Forex.com.
How could it affect GBP/USD?
In the wake of a ‘dovish rate hike’, the pound is expected to extend its bearish momentum versus its American counterpart and could breach the 1.3000 psychological support.
“At the downside, sustained break below 1.3085 base would open way towards psychological 1.30 level and key support at 1.2957 (19 July low). Initial (upside) barrier lays at 1.3122 (10SMA), followed by falling 20/30SMA’s (1.3155/68) and bear-channel upper boundary (1.3207), Slobodan Drvenica at Windsor Brokers Ltd notes.
Key Notes:
GBP/USD Forecast: Setting up for a fresh bearish breakdown ahead of BoE
GBP/USD looks vulnerable on BOE day — Confluence Detector
The Bank of England Preview: Dovish rate hike set to undermine Sterling's ground
About the BOE interest rate decision
BOE Interest Rate Decision is announced by the Bank of England. If the BoE is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the GBP. Likewise, if the BoE has a dovish view on the UK economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.
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
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.