BoE is widely expected to expand stimulus today, through expansion of the quantitative easing program. The asset purchase target would be increased by GBP 100B to GBP 745B. There are some expectations of further increase later in the second half of the year. Bank rate would be held unchanged at 0.10%. BoE officials have ruled out negative interest rate for the near term. As Chief economist Andy Haldane suggested, BoE is “not remotely closed” to negative rates. Though, discussions will likely be carried out on the topic.
Suggested readings on BoE:
- BOE to Expand QE and Discuss Negative Rates
- Bank of England to Ramp Up QE as UK GDP Collapses, Brexit Clock Ticking
Sterling is trading relatively mixed in this week, without a clear direction. GBP/CHF could be a focus as it was rejected by both 55 day and 4 hour 55 EMA, which suggests some downside biases. Break of 1.1837 temporary low will resume the fall from 1.2259. Further break of 1.1716 key near term support will argue that whole rebound from 1.1102 has completed. And deeper fall would be seen then to retest 1.1102 low.
