BoE: Expect a hawkish statement today - Westpac

Markets have largely priced out an imminent BoE rate rise, but expect a hawkish (hike coming) statement, according to Tim Riddell, Research Analyst at Westpac.

Key Quotes

“GBP sentiment turned as data sharply deteriorated, Brexit acrimony grew (with EU and within May’s minority govt.) and BoE’s Carney highlighted risks that their policy guidance was now a lot less certain. As weather and Easter distortions diminish, it should be clearer how deeply sentiment has been hit.”

“Services dominate the UK economy and next week’s BoE Agents’ survey will give a timely update of their employment and investment intentions. If production, trade, the Inflation Report and services data show continued weakness, the BoE could be on hold for longer, especially if Brexit talks fail to improve into the late-June EU Leaders’ Summit.”

“Although there could be a pause in the sharp USD gains seen recently, issues weighing on GBP seem likely to persist and the low 1.30s will remain a strong attraction for GBP/USD.”