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What is the outlook for GBP, with the Scottish Parliamentary election and BoE policy meeting later today?

Here is their view, courtesy of eFXdata:

Citi outlines its expectations for this  Thursday’s Scottish Parliamentary election, and BoE policy meeting.

“With no overnight counting, event risk is likely to persist into this weekend. The SNP is likely to be the biggest party, but whether they achieve an outright majority remains relevant for GBP.  Concerns about another independence referendum could weigh on GBP into and after the event, but CitiFX Strategy believes that GBP weakness on risk reduction into political uncertainty should be faded  – the underlying GBP picture remains strong for Q2,” Citi notes.

We see a reasonable chance that the BoE do message a technical QE taper, in line with the base case of our colleagues in Citi Economics.  We also see plenty of reasons to wait.  We think FX is only going to care if the nature of the ‘taper or no taper’ debate at the April meeting bears much relevance to the overall direction of monetary policy, especially on the risk of earlier rate hikes,” Citi adds.

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