Into the BoE!

10 September,, Vilnius – Into the BoE events today at 11:00 GMT, the Bank of America Merrill Lynch and Credit Agricole have shared their views, trades and indicated what to expect.

Bank of America

At the meeting the BoE will require to acknowledge global events and fundamental data that would justify a more dovish tone, begins Merrill Lynch.

Although the BofA does not expect the central bank to “row back” a rate hike from where it is currently planned, expressions of concerns about China development impact on the UK economy and, to a moderation, currency-induced dis-inflationary pressure are likely.

“However, there might be a circular aspect to any sterling reference being used as a reason for the BoE not to concur with market pricing on rates. We suspect that dovishness is priced and a “not dovish enough” set of minutes is probably the greater risk, which would offer sterling support,” Merrill Lynch argues.

Credit Agricole

The French Credit Agricole believes that a worry about mounting evidence of growth slowdown forcing the MPC members to adopt a more cautious stance is premature.

The MPC is likely to focus on the global market developments in contrast to improving CPI and a 3% drop in GBP TWI from August. In turn this could depict that the BoE will become less sensitive to the latest correction lower in commodity currencies’ trend. Furthermore, the latest G20 series of measures to control the market rout in China could lift MPC’s confidence.

“All in all, we expect the BoE’s to keep its policy stance little changed from August with Ian McCafferty still voting for a hike. The outcome could help GBP extend its gains against EUR,” Credit Agricole finished.

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