The pound awaits the highly anticipated decision by the BOE on Super Thursday. They kept us waiting for three weeks and now they have no more excuses for making a big announcement. You can read this preview or this one for in-depth analysis.
Or, here are 5 options and potential GBP/USD scenarios for this big post-Brexit decision:
Update: BOE cuts 25bp + 70 billion in total QE – GBP falls
- 25bp rate cut and nothing else: Priced in, GBP/USD rocks and rolls but basically remains in place.
- 50 billion more QE and nothing else: An almost OK substitute, but not enough: GBP/USD to rise in range, unlikely to break 1.35.
- Both a rate cut and QE: Not really priced in, a big package, GBP/USD falls in range, unlikely to fall under 1.30.
- Extreme rate cut to 0.10% or 0% and perhaps more QE: Low chances, GBP/USD falls out of bed under 1.30.
- No moves, only forward guidance: Low chances, unreliable boyfriend not priced in, GBP/USD shoots above 1.35.
What do you think?
More notes:
- Other moves such as the Funding for Lending (FLS) scheme will be welcomed moves for the economy but should not have a big impact on the pound.
- The best thing to do would be a coordinated move with the new government. An infrastructure plan which is funded by BOE-funded newly issued bonds would be the best thing to do, but perhaps it’s too early.
Here is video preview.
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