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Volatility to be seen in GBP ahead of the BOE’s QIR - Rabobank

FXStreet (Barcelona) - The Financial Markets Research Team at Rabobank sees the tone of the upcoming BOE’s QIR report having the potential to trigger substantial moves in GBP rates, as well as the pound sterling

Key Quotes

“The Bank of England is set to release its Quarterly Inflation Report around noon today. The tone of this report has the potential to trigger substantial moves in GBP rates, as well as the pound sterling.”

“As we’ve noted before, recent setbacks to economic data have already shifted market expectations regarding the timing of the first rate hike quite dramatically. Indeed, while the UK economy continues to perform relatively well, the pace at which activity is increasing is slowing.”

“Moreover, there have been growing concerns about (downside) risks to inflation. Unemployment has been on a downward trajectory, which should also be reaffirmed by today’s release of the unemployment rate for September. According to the consensus, the unemployment rate should have fallen to 5.9% (from 6.0%).”

“A soft tone in today’s Inflation Report –which is not unlikely– could therefore push the market expectations for the first rate hike further back on the calendar, which could send rates down and may result in a modest weakening of the currency.”

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