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This month’s Bank of England (BoE) decision isn’t expected to be any kind of turning point, with no new forecasts at this meeting and no need to address the QE programme as it still has room to run. Economists at TD Securities would not be surprised to see investors fade some of GBP’s recent declines as the meeting itself approaches. However, with a multitude of other drivers in play, they do not think the September MPC meeting is likely to provide a strong directional push.  

Key quotes

“We look for the BoE to keep its policy stance unchanged, but for the minutes to show more concern about the downside risks to the growth outlook. The MPC view appears to have taken a more dovish turn since August.”

“With the risk backdrop still highly fragile, we think sterling will remain a favourite of those looking for a vehicle to express negative sentiment for some time yet. Here, we think 1.2665 should be the next major reassessment level on a move lower.”

“The very near-term outlook still argues for some patience. As we begin to approach MPC meeting, however, we think the market may begin to fade some of sterling’s recent weakness. With Brexit negotiations now on hold until 28 September, the next real event risk of major consequence is a special meeting of EU leaders (24/25 September). Brexit is not currently an agenda item, so we would need to see it added for this event to become more of a focus for investors. In any case, we think the pace of negative headlines should ease in coming days as the dust from this week’s tension begins to settle.”