Major Banks have shared their 2017 BoE Super Thursday expectations with markets. With the official release taking place at 12 00 GMT, what to expect?
2017 BoE Super Thursday expectations: Major Banks perspective
This is the first BoE Super Thursday 2017, thus the report is promising to be somewhat important. Moreover, just yesterday, Theresa May won Article 50 Commons vote, a historic House of Commons mandate to start Britain’s divorce from the EU amid warnings that the looming exit negotiations could descend into a diplomatic ‘’fist fight’’.
While the official report from the bank of England is scheduled at 12 00 GMT, Major Banks have provided their forecasts in advance. Let’s go through some of the key players’ expectations in order to be ready for any outcome.
Goldman Sachs: Steady monetary policy, slightly hawkish tone
The Goldman Sachs analysts expect no changes to the current monetary policy of the Bank of England. However, they highlight that the tone of the Press Conference, the MPC minutes and the Inflation Report will be cautious, tilt hawkish.
Morgan Stanley: GBPUSD might recover to 1.27/1.28 before dropping again
The experts from Morgan Stanley stress that the market is still short GBP. This implies that there is an opportunity for positioning adjustment to boost the Pound.
They believe that GBPUSD might rebound to at least 1.27/1.28 before sliding lower again towards Morgan Stanely quarter-end target of 1.17.
BofA Merrill: Neutral Bias, no significant impact for GBP
The Bank of America stated that in case the BoE set interest rates on today’s growth and inflation, they would most likely increase the rates. However, the policymakers are looking forward to setting the policy, according to BofA.
Taking into consideration the weakness of the Pound, the BoE is still balancing the likely inflation overpace versus probable growth weakness. Thus, analysts from BofA anticipate a neutral bias on policy from BoE, with steady rates and no extension in QE. The bank highlights that it sees the risks being skewed to the hawkish side. They stated that Mr. Carney will most likely stress the absence of limits to the BoE’s inflation tolerance.
Barclays: BoE to lift GDP Forecasts, policy steady
The experts from Barclays see the BoE maintaining its current policy. Also, they expect the central bank to lift its GDP growth outlook. The latter would support the rate hike expectations and the Pound.
Moreover, the Barclays highlights the strong performance of the UK economy over the fourth quarter. Despite this, the BoE might express some concern about the sustainability of the consumption. Such suggestion comes due to the high level of the UK household debt, as per Barclays’ analysts’ view.
Credit Agricole: GBP Rallies A Sell, BoE stable
The Paris-headquartered bank expects the MPC to support its neutral policy outlook and not to revise its QE. As for the Pound, the bank sees almost no impact from the 2017 BoE Super Thursday. Nevertheless, analysts from Credi Agricole still see the need to sell GBP rallies.
Deutsche Bank: BoE To keep Neutral Bias
The biggest German lender believes that the BoE still is facing trade-off, where the data momentum is resilient at the same time with spot inflation to accelerate in the Q1. The bank further stated that the market consensus stands at the hawkish 50% for the 25 bp rate hike by the end of 2017. However, the MPC is most likely to continue to stress downside risks, while holding a neutral bias.
Additionally, Deutsche bank expects the BoE to publish a new market notice for the upcoming Gilt re-investment.
Think we missed something? Let us know in the comments section below.