UK: Buckle up... it's going to be a bumpy Brexit ride - ING
Analysts at ING suggest that while Governor Carney will feature in the star-studded panel of central bank speakers in Frankfurt this week (Tue), they doubt that the BoE chief will attempt to actively talk markets up when it comes to the timing of the central bank's next rate hike.
“It is understandable as to why the MPC are reluctant to show their policy hand amid what is set to be a crucial few weeks of Brexit negotiations - and while we do think the dovish repricing of BoE policy expectations in markets has been a tad excessive, it will be up to the data to do the talking. This week's UK data splurge – which includes the latest CPI (Tue), jobs and wage growth (Wed), retail sales (Thu) – is unlikely to be game-changing for the overall policy outlook, although some positive surprises (especially on the wage growth front) may see sentiment for a second rate hike in 2018 resurface.”
“The Brexit rollercoaster is set to continue as we countdown to the pivotal 14-15 DecEU summit. After setting a two-week deadline, the EU's chief negotiator Michel Barnier has made it clear that the ball is in the UK's court to make some headway in settling the divorce bill. Domestic politics continues to focus on Theresa May's leadership after theSunday Times reported that 40 Tory MPs are ready to sign a letter of no confidence in the Prime Minister (still short of the 48 threshold needed to trigger a leadership contest). Equally, we may see further leaks related to the Chancellor's Budget (22 Nov); while Philip Hammond's hands will be tied by weaker OBR growth forecasts - as well as higher inflation forecasts that increased debt-servicing costs - any growth gimmicks may lend itself to a steeper UK rate curve and some GBP support.”