Currency analyst

GBP exchange rate forecast from some big stakeholders before the BoE meeting

Today everybody’s attention will be focused on the meeting of the Bank of England.

The majority of economists believe that the BOE will keep its benchmark interest rate steady after cutting it to 0.25% last month and that will be a pretty good news for pound. A package of recent data on retail sales, manufacturing and the labor market shows us that the UK economy managed to shrug off the unexpected result of Brexit vote in June. The next cut in interest rates is expected in November.

Some big stakeholders like Credit Suisse and Credit Agricole are positive about the pound’s perspectives. There is a strong rationale behind their confidence in the pound’s uplift. There is no need for the Monetary Policy Committee to be any more dovish than the market is already pricing in for the last months of this year (strategy “sell the rumor, buy the fact” does work). Moreover, the BOE might be willing to save ammunition for rugged times – an actual “Brexit”. Therefore, the pound will unlikely face a considerable downfall from the current levels.

Barclays, as its aforementioned colleagues, doesn’t expect any changes in the MPC’s monetary policy settings today. The Barclays experts expect the Committee members vote in favor of the status quo of the current APF, but remains uncertain about the Gertjan Vlieghe’s vote saying that he is apt to vote for a cut. The Barclays officials have also mentioned that the minutes can make it evident for the Treasury Select Committee that some the MPC members are open towards further package of easing measures. This should make downside risks to the economy materialize and might be keeping GBP/USD under pressure. That’s why they chose to target GBP/USD at 1.27 by the end of this year.

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