BoE Preview: Sterling has room to rise if Governor Bailey abandons negative rates

The Bank of England (BoE) is set to leave its policy unchanged and put an end to speculation about negative rates, boosting sterling. Upbeat economic data and optimism about vaccines are set to outweigh concerns about Brexit, Yohay Elam, an Analyst at FXStreet, reports.

Key quotes

“Saying no to negative interest rates may certainly be the right thing for pound bulls. The BoE is set to conclude its review of the topic and potentially rule it out for now.” 

“Bailey and his colleagues publish their Monetary Policy Report in addition to the rate decision, making this Thursday ‘super.’ Apart from commenting on negative rates, they are set to discuss the current state of the economy – and the tone is set to be upbeat.” 

“Britain's rapid vaccination scheme provides hopes for accelerated growth down the line. The UK has already immunized around 14% of its population, the highest in the West.”

“Governor Bailey may warn about the implications of Brexit. Barriers to trade may undermine the recovery. Will the bank provide insights on this topic? That is probably the sole issue that could limit gains from the BoE's decision optimism.”