Search ForexCrunch

BOE monetary policy decision – Overview

It’s a ‘Super Thursday’ again and time for the  Bank of England’s  (BOE) take on its monetary policy program, which will be announced at 1100GMT, accompanied by the release of the minutes of the policy meeting.

The BOE is widely expected to keep the benchmark bank rate unchanged at 0.50, with a 7-2 voting composition in favor of the status-quo. The BOE hawks, McCafferty and Michael Saunders will continue to remain the dissenters.

In short, the  BOE  is likely to adopt a wait-and-see approach, as looming Brexit concerns continue to pose downside risks to the UK economic outlook while steadying inflation expectations also offers some breather to the BOE.

The BOE’s June meeting is one of those meetings without updated projections, quarterly inflation report (QIR) or a press conference, and hence, there will be a limited market reaction, as the bank’s status-quo is already priced-in by the markets.

How could it affect GBP/USD?

Despite expectations that the BOE will stand pat today, markets will closely eye any hints on an August rate hike, which could turn out to be GBP-supportive. One such signal could a change in the voting pattern, with 6-3 or 5-4, indicating hawkish tweak in the policy statement.

In case of a hawkish turn, the GBP/USD pair is likely to re-attempt the 1.32 handle. A break above which could open further upside towards 1.3266 (10-DMA) and 1.3299/1.3300 (Jun 15 high/ zero figure). Should the BOE come out dovish, a breakdown of support at 1.3100 could trigger further declines in the pair towards 1.3038/25 levels (Nov & Oct 2017 lows).

Key Notes:  

BoE: No change in policy today – Deutsche Bank

BoE to keep rates on hold – Rabobank

GBP/USD hangs near fresh YTD lows, BoE decision awaited

About the BOE interest rate decision

BoE Interest Rate Decision is announced by the  Bank of England. If the BoE is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the GBP. Likewise, if the BoE has a dovish view on the UK economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.