The GBP/USD pair is extending its gains toward 1.36 ahead of the Bank of England’s Interest Rate Decision and the Asset Purchase Facility due out at 12:00 GMT. The BoE is set to leave its policy unchanged in its last decision of the year and after adding £150 billion to its bond purchase scheme in November and as we get closer to the release time, here are the expectations forecast by the economists and researchers of six major banks.
See – GBP/USD: 1.3515/55 is break point to 1.4377 – Commerzbank
ING
“We doubt we’ll get any fresh action this Thursday – and instead we’re likely to get a series of signals of what the Bank could do if conditions deteriorate around New Year. The BoE has already expanded the scope of its government bond purchase programme by GBP150 B in November, enabling it to continue purchases through 2021. The BoE may well indicate that it could increase the pace of purchases again if financial conditions warrant it, although for the time being, sterling markets remain relatively calm. However again, it’s not impossible that the Bank signals openness to re-deploy its commercial paper scheme, or to top-up the corporate bond-buying programme, should conditions warrant it over coming weeks.”
TDS
“We look for the Bank of England to keep its policy rate and QE target unchanged at this meeting, as all the big decisions were already made last month when the QE programme was given at GBP 150 B boost. Markets had previously been anticipating a possible update on the investigation of the negative rate at this meeting, but judging from recent MPC comments, we expect that to come at the February decision and MPR, as it sounds like there’s still work to do. We don’t look for anything new on negative rates in the MPC minutes, outside of maybe just mentioning that they’re still examining the issue, as they’ve done in the past.”
Deutsche Bank
“We don’t expect any changes to the Bank’s policy settings after they increased QE by a further GBP150 B at their last meeting in November.”
Rabobank
“We expect the Bank of England MPC to leave the policy rate at 0.10% this week. We also expect the central bank to stay the course on its asset purchases. The meeting is likely to be ‘no big deal’, as it is overshadowed by the uncertainties surrounding Brexit, and, of course, its attention-grabbing headlines. Financial market expectations for future Bank rate are driven by headlines on Brexit, suggesting an elevated risk of negative rates in case of a no-deal Brexit.”
Citibank
“Even in a no-deal scenario, we do not expect cuts. Instead, flexibility of GBP150 B QE package could be deployed and complemented with a corporate bond purchase program. With a likely Brexit deal, the improving economic outlook warrants wait-and-see.”
KBC Bank
“We expect a wait-and-see bias after easing last month and the end-of-year Brexit deadline nears. We’ll watch for any references to negative rates but don’t expect the BoE to signal implementation in the short run. We hold our view that as long as the positive attitude towards an agreement holds, sterling could extend (short-term) gains.”
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