The week ahead for sterling traders comes with a number of key events, specifically, the BoE and analysts at Nomura offer their outlooks.
Key Quotes:
“UK BoE household borrowing, Jun (Monday): Encouraging numbers from UK Finance show a rise in net lending on dwellings, net consumer credit and mortgage approvals for house purchase in June. As a result, we expect this to show up in the Bank of England’s official figures.”
“UK PMI surveys, Jul (Wednesday): The headline manufacturing index has been around the 54.0 to 54.5 level over the past three months. Concerns about protectionism, Brexit, China etc. could have a negative effect on this index. Combined with a fall in the business activity index of the services survey (we forecast a fall from 55.1 to 54.5) that would imply a decline in the composite index to around 54.5 – which would mean that it remains about half a point above its H1 average.”
“UK BoE policy decision, Aug (Thursday): We expect the Bank of England to raise interest rates for a second time this cycle by 25bp. This is supported by the data – unlike in the run up to the August 2017 and May 2018 policy meetings the surprise index has not collapsed ahead of the forthcoming meeting. The Bank publishes its Inflation Report forecasts too – the focus as usual will be on the Bank’s estimate of inflation towards the end of the horizon (i.e., two to three years ahead), but also on the Bank’s thoughts on equilibrium interest rates. Recall that based on unchanged monetary policy the Bank saw inflation settling at a little over 2.35% in two to three years’ time. See our main article this week for a preview of the meeting.”
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