The Bank of England (BoE) is set to leave rates unchanged and continue dismissing negative borrowing costs. The BoE’s decision is set to pale in comparison to the Fed’s but may provide pound bulls ammunition to push higher – for all the good reasons, Yohay Elam, an Analyst at FXStreet, reports.
Key quotes
“Andrew Bailey, Governor of the Bank of England, has reiterated that while technical preparations are in place, slashing rates below zero is off the cards. If the BoE repeats this stance, it would further alleviate fears and allow sterling to shine.”
“The immunization scheme and the lockdown are bearing fruit. UK cases have fallen sharply from the highs in January. During those difficult days, the economy still outperformed estimated, shrinking by 2.9% in the first month of the year. And since then, the government kicked off the reopening and is set to bring the country to near-normal conditions in mid-June. All in all, the near future looks promising for the UK.”
“So far, the BoE has been reluctant to discuss the topic – and may refrain from talking about yields in its statement nor in its accompanying meeting minutes. Moreover, at this March meeting, the bank does not hold a press conference, giving reporters no chance to discuss the topic. This ‘sound of silence’ is powerful and would allow the returns to continue higher – carrying sterling higher with them.”
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