Next week, in the UK, the Bank of England meets. Analysts at Danske Bank point out that it is one of the ‘small’ meetings and they look for unchanged policy rates.
Key Quotes:
“In the UK next week, the most important event is the Bank of England meeting on Thursday, where we expect policy to remain unchanged (vote count unchanged at 7-2 on rates). As this is one of the smaller meetings without updated projections and a press conference, the focus is set to be on the accompanying minutes. At the May meeting, the Bank of England stayed on hold, as it wanted more time to see whether or not the weakness in data was temporary.”
“We do not think the Bank of England has received enough data to change this view but, given inflation is slightly lower and the unemployment rate was slightly higher in May than projected, the probability of a rate hike as soon as August has declined slightly. The market pricing of a 50% probability
of a hike in August seems fair at this point.”
“On Brexit, which remains the key driver for GBP, watch out for any headlines ahead of the EU summit on 28-29 June, although it seems to us that both the EU and the UK have accepted that not much will happen at this summit. We hope to get more clarification ahead of the next EU summit in October.”
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