BoE is expected raise interest rate by 50bps to 1.75% today. That would be the largest rate hike since 1995, while interest rate will then be at the highest level since 2008. The voting will again be a focus and the new economic projections will be scrutinized too. Back in June BoE said inflation is expected to rise to slightly above 11% in October while GDP was weaker than anticipated at the May report. The change in outlook would be reflected in the new economic projections.
Here are some previews on BoE:
- BoE Interest Rate Decision: Forecasters Can’t Make Up Their Minds
- Bank of England Preview
- Bank of England Ponders a More ‘Forceful’ Rate Hike
GBP/CHF turned into range trading after hitting 1.1525 in late June. There is risk of sell-on-fact in Sterling after BoE which prompt a downside breakout. But anyway, outlook will stay bearish as long as 1.1774 resistance holds, even in case of a rebound. Current down trend is still expected to resume towards 1.1107 low, which is close to 161.8% projection of 1.3070 to 1.2134 from 1.2598 at 1.1084 next, in the medium term.
UK PMI construction dropped to 48.9, first contraction since since start of 2021
UK PMI Construction dropped from 52.6 to 48.9 in July, below expectation of 52.1. That’s the first contraction reading since January 2021, and worst since May 2020.
Tim Moore, Economics Director at S&P Global Market Intelligence, said:
“July data illustrated that cost of living pressures, higher interest rates and increasing recession risks for the UK economy are taking a toll on construction activity. Total industry output fell for the first time since the start of 2021 as civil engineering joined house building in contraction territory…. Expectations for output growth in the next 12 months are far less exuberant than those seen over the past two years, amid concerns that elevated inflation and higher borrowing costs will constrain demand.”
Full release here.