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13 May 2015
BoE QIR preview: Overtly hawkish tone unlikely – FXStreet
FXStreet (Barcelona) - FXStreet Editor and Analyst, Omkar Godbole, explains that although today’s BoE quarterly inflation outlook will indicate towards a rate hike as a probable next move, Carney’s concerns regarding EUR/GBP rate will likely disappoint traders.
Key Quotes
“The market is widely expecting Mark Carney to come out slightly more hawkish and optimistic, thereby indicating a possibility of an early rate hike. At present, markets are pricing about 3 rate hikes by the end of 2016, and 4 rate hikes over the next 24 months.”
“However, the Carney is likely to be more balanced, rather than overtly optimistic – the single reason being the EUR/GBP exchange rate. The PMI reports for the last couple of months have repeatedly shown concern in the private sector about weak inflow of orders due to strengthening GBP against the EUR. With Greece issue likely to remain in the place for few more months, the strengthening GBP is likely to be a concern for the BOE.”
“Carney could also comment on the rising Trade deficit in the UK, indirectly delaying the rate hike bets in the UK and leading to a fall in the GBP across the board.”
“Overall, the QIR is likely to indicate interest rate hike as the next move in the UK. However, downward revision of wage growth forecasts, and concerns regarding EUR/GBP exchange rate is likely to result into disappointment for traders expecting an overtly hawkish outlook.”
Key Quotes
“The market is widely expecting Mark Carney to come out slightly more hawkish and optimistic, thereby indicating a possibility of an early rate hike. At present, markets are pricing about 3 rate hikes by the end of 2016, and 4 rate hikes over the next 24 months.”
“However, the Carney is likely to be more balanced, rather than overtly optimistic – the single reason being the EUR/GBP exchange rate. The PMI reports for the last couple of months have repeatedly shown concern in the private sector about weak inflow of orders due to strengthening GBP against the EUR. With Greece issue likely to remain in the place for few more months, the strengthening GBP is likely to be a concern for the BOE.”
“Carney could also comment on the rising Trade deficit in the UK, indirectly delaying the rate hike bets in the UK and leading to a fall in the GBP across the board.”
“Overall, the QIR is likely to indicate interest rate hike as the next move in the UK. However, downward revision of wage growth forecasts, and concerns regarding EUR/GBP exchange rate is likely to result into disappointment for traders expecting an overtly hawkish outlook.”