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The dovish tint economists at TD Securities expect offers GBP some headwinds, but they do not expect a large directional reaction. Here are three different scenarios at its implications for the GBP/USD and EUR/GBP pairs.

See – Bank of England Preview: Eight major banks expectations

Key quotes

“Hawkish (15%): Confident in August forecasts. Policy unchanged with a 9-0 vote. Minutes show that while ‘some’ MPC members see downside risks to the growth projections laid out in August, the majority of the MPC still views the forecasts as a reasonable base case. GBP/USD 1.3015 EUR/GBP 0.9115” 

“Base Case (60%): Growing downside risks. Policy unchanged with a 9-0 vote. Minutes show growing concern around downside risks to August growth outlook, and less confidence that recovery will be as swift as had been expected. More worries about longer-term impacts on growth and inflation. No specific hints about QE past year-end as we believe that the MPC will wait until the November MPR meeting to make that announcement. GBP/USD 1.2840 EUR/GBP 0.9235”

“Dovish (25%): Some dissent to extend QE. Policy unchanged with 7-2/6-3 vote as Saunders, Haskel, and possibly Vlieghe vote for an additional £50 B QE. GBP/USD 1.2795 EUR/GBP 0.9270”