Sterling is trading as the strongest one for the week and is maintain gains. Focus turns to BoE “Super Thursday”. Bank Rate is widely expected to be kept at 0.75%. Asset purchase target should be held at GBP 435B. Decisions should be made by unanimous 9-0 votes.
Economic development appeared to be positive in Q1, both domestically in UK and globally. But the resilience in UK GDP appeared to be boosted by pre-Brexit stockpiling. Momentum could dissipate easily in Q2, which was seen in the fall in April PMI manufacturing already. Headline CPI steadied at 1.9% yoy in March, which was within BoE’s target range. Such developments shouldn’t prompt any change in BoE’s policy. Adding to that, Brexit uncertainty is prolonged after UK was granted flexible extension until October 31.
The more interest things to note would be in the new economic projections in the quarterly inflation report. But for now, the figures are rather academic given that the form of Brexit is yet to be known.
Here are some suggested readings on BoE:
