BoE to hold rates, upside risk for GBP – Wells Fargo
The Bank of England (BoE) will announce its decision on monetary policy on Thursday. According to analysts at Wells Fargo, the central bank will keep its key interest rate unchanged at 0.75%, in line with market consensus.
“Following a string of weak economic and sentiment data over the last few months, market participants have started to consider the possibility the Bank of England (BoE) could ease monetary policy. Last week, December retail sales significantly underperformed expectations, while monthly GDP data released in mid-January indicated the economy contracted in November. Tack on uncertainties regarding the future trade relationship between the U.K. and E.U., and the case for interest rate cuts becomes a bit more compelling. However, recent jobs and wage growth data indicate a relatively healthy labor market, and in our view, should result in the Bank of England holding policy rates steady next week. Formal approval of Boris Johnson’s withdrawal agreement should also keep the BoE on hold.”
“As of now, markets are implying about a 45% chance of a BoE rate cut next week, which—should the BoE hold rates firm—could result in some upside for the British currency.”